Prominent businessmen and magnates of the tourism industry endorsed the government’s economic reform agenda and introduction of direct taxation last night.
Speaking at a launching ceremony for the “Fiscal and Economic Reform Programme,” Mohamed Umar Manik, chairman of the Maldives Association of the Tourism Industry (MATI), observed that a sustainable source of government revenue was necessary for providing public goods and services.
“Today we have democracy in our country, but democracy can only be strengthened if we are able to deliver,” said the Chairman of Universal Enterprises. “To do this, our government must have sources of income. A detailed reform agenda has been proposed for this. In my view, it is an ideal reform programme.”
Manik congratulated President Mohamed Nasheed and “those who framed the reform agenda.”
Following consultation with the government over the proposed taxes, MATI said in a statement earlier this week that the absence of a taxation system in the country “similar to tax regimes successfully implemented in other countries” was a serious impediment to development and economic growth.
Old ways of thinking
Preceding the MATI chairman, Mohamed Waheed Deen, philanthropist and owner of Bandos Island Resort, argued in an impassioned speech that a taxation system was essential for democracy to deliver rising standards of living.
“This should have been done and finished 30, 40 or 50 years ago,” he said. “I sincerely thank our young President for beginning this effort today.”
A taxation system had to be introduced “because we are using the people’s property,” Deen contended.
“How can I say that I own Bandos?” he said. “It is not mine. It belongs to the Maldivian people.”
Taxation was the means for a more equitable distribution of wealth, Deen said: “Who wouldn’t want to send their child abroad for higher education? But can we facilitate it for them today?”
The government’s economic reform programme was necessary because “we do not want to keep the gap between rich and poor in this country anymore,” Deen asserted.
“What is the main reason a country becomes impoverished?” he asked. “I believe that one of the main reasons is refusal to tell the people the truth by many successive governments, many kings, until we have come to this point.”
In the Maldives’ long history, Deen continued, the public were indoctrinated to not criticise the government and given to understand that “only a particular group, from a particular family, could rule.”
Deen speculated that “the biggest challenge” the government’s economic reform agenda would face will be “changing people’s mentality.”
“This is the biggest problem facing our country today: [one side says] ‘everything is going right’ [while the other says] ‘nothing is going right,’” he explained. “So we have to educate our people, especially the councils.”
Deen also cautioned against unprincipled opposition to the government: “We could stay angry, hateful and disapproving and say ‘go on, run the government’ but sadly – remember this well – any harm this government suffers, the people will suffer many times over.”
Waheed Deen began his remarks by quoting the Quran 3:26: “O Allah. Lord of Power (And Rule), Thou giveth power to whom Thou please, and Thou strip off power from whom Thou please: Thou endow with honour whom Thou please, and Thou bringeth low whom Thou please: In Thy hand is all good. Verily, over all things Thou hast power.”
“Fruits of freedom”
Following graduation from the ranks of the Least Developed Countries (LDCs), said Sim, the country could no longer rely on loans and foreign aid.
“In a fundamental sense, taxes are what the people give to the government they elected to manage their affairs,” he said.
Contrary to popular opinion, Sim continued, MATI had been advocating a taxation system as the organisation believed a sound fiscal policy was essential for “day-to-day planning of business matters as well as national affairs.”
In addition to fiscal responsibility, he added, new legislation and strengthening of the judicial system was also needed to foster investor confidence while stalled development of new resorts should be restarted to spur employment and private sector growth.
Sim concluded his remarks by appealing to “everyone who has to pay taxes, please pay taxes.”
“We in the business community welcome the bold initiative being undertaken by your administration to carry out a programme of comprehensive economic and fiscal reform,” Hilmy said.
He added that businesses were “delighted” with the government’s policy of a “shift away from import duties as a major source of government revenue.”
Hilmy observed that for successful tax administration, “transparency, accountability, predictability and effective combating of corruption” were necessary “preconditions.”
While the local tourism industry “has been the main engine of growth in the Maldivian economy for the last 40 years or so,” Hilmy warned that “tourism as we all know is an extremely volatile industry subject to sudden shocks and highly sensitive to fluctuations in global economic conditions.”
He suggested that a successful tax system should therefore “ensure the competitiveness of Maldivian tourism in the global market place.”
“We in the tourism industry also welcome your efforts to reduce public expenditure and wastage and create a more efficient and lean government,” he continued. “I can assure that lest there be any doubt that there is full confidence on the part of the tourism industry in the proposed reform programme and we have every confidence that this programme will be able to deliver the kind of success that we all wish and the kind of prosperity that we all are looking for.”