revenue raising measures – Minivan News

Government scraps plan to impose import duty on staple foodstuff

The government has reversed its decision to impose a 10 percent import duty on staple foodstuff such as rice, flour, wheat and sugar, Minister of Tourism Ahmed Adeeb has revealed.

“Emergency economic council meeting ongoing where President [Abdulla] Yameen has just decided not to impose any duty on sugar, rice, flour (staple foods),” the council’s co-chair tweeted this morning.

Speaking at a press conference at the President’s Office later today, Adeeb said parliament and the Progressive Party of Maldives’ parliamentary group have since been informed of the decision.

“The president’s decision was made in light of requests from a lot of people as well as the current situation [with the capital’s water crisis] we are faced with,” he said.

Finance Minister Abdulla Jihad told parliament’s budget review committee last month that the government anticipated MVR533 million (US$34.5 million) in additional income from import duties.

The new duties were to represent 15 percent of the new revenue anticipated in the 2015 budget.

Revising import duties

Revising import duties was among several revenue raising measures in the record MVR24.3 billion (US$1.5 billion) state budget for 2015 currently before parliament.

Government-sponsored amendments (Dhivehi) to the Export-Import Act – which proposed raising custom duties from the current zero rate to 10 percent for staple foodstuffs – were subsequently submitted to parliament last month.

Scrapping plans to levy import duties on staple foodstuff from October 2015 was meanwhile among several amendments submitted to the budget by opposition Maldivian Democratic Party (MDP) MPs last week.

The minority party has issued a three-line whip for its MPs to vote against the budget if none of the proposed revisions are passed.

During last month’s parliamentary budget debate, opposition MPs strongly criticised the proposed tax hikes, contending that the burden of higher prices of goods and cost of living would be borne by the public.

The current administration’s economic policies – such as waiving import duties for construction material imported for resort development as well as luxury yachts – benefit the rich at the expense of the poor, MDP MPs argued.

In addition to a 10 percent tariff for oil, the government’s amendment bill also proposed raising custom duties for tobacco from 150 to 200 percent and raising the duty for a single cigarette to MVR1.25.

Additionally, a 20 percent custom duty would be imposed for luxury cosmetics and perfume and a 200 percent custom duty for land vehicles such as cars, jeeps, and vans.

The forecast for additional revenue for the 2015 budget was MVR3.4 billion (US$220 million), including US$100 million expected as acquisition fees for investments in special economic zones and MVR400 million (US$25.9 million) from the sale and lease of state-owned land.

The other measures included introducing a green tax of US$6 per night in November 2015 and leasing 10 islands for new resort development.

Tariffs were last revised in April this year after parliament approved import duty hikes for a range of goods proposed by the government as a revenue raising measure.

Targeting subsidies

Adeeb meanwhile told the press today that the government still planned to shift to a model of targeting government subsidies to the needy as part of efforts to consolidate public finances.

In his budget speech to parliament last month, Jihad also revealed plans to revise the electricity subsidy, which he said currently benefits the affluent more than the needy.

Targeting the electricity subsidy to low-income families or households would save 40 percent of the government’s expenditure on the subsidy, Jihad explained, and allow the government to provide a higher amount to the poor.

While Maldivians were not legally required to declare income and assets in the absence of an income tax, Adeeb said today that the National Social Protection Agency (NSPA) currently used criteria for means-testing for subsidies.

Minister of Economic Development Mohamed Saeed meanwhile noted that the International Monetary Fund (IMF) has recommended targeting subsidies and reducing recurrent expenditure to reign in the fiscal deficit.

“The electricity subsidy is one that goes to even the richest strata of society. Basic food subsidies are being enjoyed now by the resorts, and never mind the resorts, are being enjoyed by wealthy foreign visitors who stay at the resorts,” Dr Koshy Mathai, resident representative to Sri Lanka and Maldives, told MPs on the public accounts committee in February.

“That to us seems like a totally unnecessary policy.”

He added that “substantial savings” could be made from the budget by targeting subsidies to those most in need of assistance.

Meanwhile, in May, MMA Governor Dr Azeema Adam called for “bold decisions” to ensure macroeconomic stability by reducing expenditure – “especially the un-targeted subsidies.”

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Government proposes import duty hike for oil, staple foodstuffs

The government has proposed raising import duties for staple foodstuffs and oil to 10 percent to raise additional revenue anticipated in the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

Amendments (Dhivehi) submitted to the Export-Import Act on behalf of the government by Maldives Development Alliance MP Mohamed Ismail proposes raising import duties from the current zero rate to 10 percent for rice, flour, wheat, and sugar as well as oil or petroleum products.

Additionally, the bill proposes raising custom duties for tobacco from 150 to 200 percent and raising the duty for a single cigarette to MVR1.25.

The government has also proposed imposing a 20 percent custom duty for luxury cosmetics and perfume and a 200 percent custom duty for land vehicles such as cars, jeeps, and vans.

However, the bill proposes scrapping import duty for luxury yachts imported for tourism businesses.

The stated purpose of the amendment is revising import duty rates in light of “price changes in the global market”.

The latest monthly economic review from the Maldives Monetary Authority noted that “the International Monetary Fund (IMF) commodity price index fell in both monthly and annual terms in September 2014, by 4 percent and 9 percent, respectively.”

“The monthly and annual decline in commodity prices was attributed to the decline in petroleum, metal and food prices. The price of crude oil fell by 4 percent in monthly terms and by 12 percent in annual terms and stood at US$95.9 per barrel at the end of September 2014,” the review stated.

About 30 percent of the Maldives’ GDP is spent on importing fossil fuels. In 2012, US$ 486 million was spent on oil imports, and the figure is estimated to rise to US$700 million by 2020.

According to the Maldives Customs Service, of the MVR7.2 billion (US$466.9 million) worth of goods imported in the first quarter of 2014, one-third was spent on petroleum products.

Finance Minister Abdulla Jihad meanwhile told parliament’s budget review committee last week that the government was considering increasing custom duties “mostly for luxury items, or items that are harmful to the environment or health.”

Jihad had said the items under consideration were tobacco, perfume, and vehicles.

Other revenue raising measures

In his budget speech to parliament, Jihad also revealed plans to revise the electricity subsidy, which he said currently benefits the affluent more than the needy.

Targeting the electricity subsidy to low-income families or households would save 40 percent of the government’s expenditure on the subsidy, Jihad explained.

Jihad told the budget review committee that the government anticipates MVR533 million (US$34.5 million) in additional revenue from revising import duties, which was among five revenue raising measures proposed with next year’s budget.

The forecast for additional revenue from the new measures is MVR3.4 billion (US$220 million), including US$100 million expected as acquisition fees for investments in special economic zones and MVR400 million (US$25.9 million) from the sale and lease of state-owned land.

The other measures were introducing a green tax of US$6 per night in November 2015 and leasing 10 islands for new resort development.

An amendment (Dhivehi) to the Tourism Act has been submitted by Progressive Party of Maldives MP Abdulla Khaleel on behalf of the government for introducing the green tax.

The government has also decided to waive import duties for construction material and capital goods imported for resort development and provide sovereign guarantees for loans.

Meanwhile, at the ongoing budget debate, opposition Maldivian Democratic Party MPs have criticised plans to hike import duties while providing concessions to wealthy resort owners.

The burden of higher prices due to higher tariffs would be borne by the public, the MPs argued, contending that the government’s economic policies would benefit the rich at the expense of the poor.

“Our question is why shouldn’t an income tax be introduced? When MDP submitted an income tax bill to parliament it wasn’t passed. But we are telling this government to introduce an income tax and [tax] the affluent as well,” said MDP MP Eva Abdulla last week.

US$6 green tax to be introduced from November 2015, says tourism minister

Government submits revenue raising bills to parliament

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Government submits revenue raising bills to parliament

The government has submitted two bills to parliament for introducing a green tax and revising import duties to raise additional revenue anticipated in the 2015 state budget.

The President’s Office explained in a press statement on Thursday (November 13) that the government submitted amendments to the Tourism Act to introduce a US$6 per day ‘green tax’ on tourist establishments with the exception of guesthouses.

“The government decided to introduce this tax, as the Maldives is a tourist destination and the lack of a safe waste management system is adversely affecting tourism industry, to pave the way for the establishment of an adequate environment-friendly waste management system, to make Maldivian tourism an environment-friendly industry, and to provide an environment-friendly service to tourists,” the statement read.

The amendment also specifies the powers of the Maldives Inland Revenue Authority to collect the green tax, the statement added.

Tourism Minister Ahmed Adeeb told the press last week that the green tax would be levied in November 2015 – 11 months after the abolition of the bed-tax, which will continue to be charged at US$8 a night until the end of this month.

Adeeb insisted that the green tax would not hinder the demand from tourists – especially from Europe – who would become “champions” of the Maldivian environment by paying the tax.

While some resort owners have suggested that the combination of the bed tax with the rise in Tourism Goods and Services Tax (T-GST) to 12 percent this month has affected bookings, Adeeb vowed there would be no further hikes in T-GST during the current administration’s five-year term.

Opposition MPs have meanwhile sought assurances from the government that proceeds from the green tax would be used to finance environmentally sustainable infrastructure projects such as sewerage and coastal protection in the islands and not for the state’s wage bill.

In his budget speech to parliament earlier this month, Finance Minister Abdulla Jihad noted that MVR3.4 billion (US$220million) was forecast from new revenue raising measures, which also includes acquisition fees from investments to special economic zones (SEZs), income from the home ownership programme, and leasing 10 islands for resort development.

Import duties

The government also submitted amendments to the Export-Import Act to revise customs duties or tariffs to reflect “changes in the price of import goods in the global market,” the President’s Office stated.

In April, parliament approved import duty hikes for a range of goods proposed by the government as a revenue raising measure.

Jihad meanwhile told the budget committee last week that the government was considering increasing custom duties “mostly for luxury items, or items that are harmful to the environment or health.”

The cabinet’s economic council has not yet finalised the import duty or tariff revisions, Jihad noted, though he did reveal that the items under consideration include tobacco, perfume, and vehicles.

Tariffs for tobacco would be raised from the current 150 percent to 300 percent, 100 to 150 percent for cars, and zero to 10 percent for perfume, Jihad said.

Asked if higher custom duties would lead to higher prices, Jihad said the impact on the inflation rate would have to be studied for a proper assessment, which would take time to complete.

At parliament’s budget debate last week, Maldivian Democratic Party (MDP) MP Eva Abdulla criticised the proposed import duty hikes, noting that the government has decided to waive tariffs for construction material or capital goods for new resorts with development stalled due to financial constraints.

The burden of higher prices of goods due to higher custom duties would be borne by the public, she argued.

Eva noted that Jihad told the budget committee of plans to increase import duty for foodstuff and petroleum products.

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MPs quiz finance minister about revenue raising measures

MPs on the budget review committee quizzed Finance Minister Abdulla Jihad yesterday about revenue raising measures proposed within the record MVR24.3 billion (US$1.5 billion) state budget for 2015.

Briefing the committee yesterday (November 10), Jihad explained that MVR3.4 billion (US$220 million) in additional revenue is anticipated from raising import duty rates from July onward and introducing a ‘green tax’ for tourists.

Additionally, acquisition fees from investments to special economic zones (SEZs), income from the home ownership programme, and leasing 10 islands for resort development would help raise the forecast revenue.

The minister also told the committee that domestic debt had reached about MVR20 billion (US$1.2 billion)- 39 percent of GDP -making the rolling over of T-bills “a nightmare”.

The government was considering increasing custom duties “mostly for luxury items, or items that are harmful to the environment or health,” he said.

Tariffs for tobacco would be raised from the current 150 percent to 300 percent while duty would be raised from 100 to 150 percent for cars, and zero to 10 percent for perfume, Jihad said.

Asked if higher custom duties would lead to higher prices, Jihad said the impact on the inflation rate would have to be studied, which would take time to complete.

Jihad stressed that the government has ceased deficit monetisation – borrowing money from the central bank to finance the deficit – in May, as a result of which the inflation rate was reduced to 1.4 percent.

In April, parliament approved import duty hikes for a range of goods proposed by the government as a revenue raising measure.

Meanwhile, the forecast for income from SEZ acquisition fees is US$100 million, Jihad revealed, which is expected by August 2015.

A further MVR400 million (US$25.9 million) is forecast from leasing and sale of land from across the country, Jihad said – in particular, plots from unused reclaimed land in various islands.

The state-owned land designated for leasing or sale falls under three categories, he explained, which were residential, commercial, and industrial.

Moreover, 10 new islands would be leased next year for resort development, he continued, which would generate income for the government in the form of acquisition costs.

As an incentive or relief for new resorts with development stalled due to financial constraints, Jihad said the government would waive import duties for construction material or capital goods next year.

Tourism Minister Ahmed Adeeb revealed yesterday that a green tax of US$6 per night would be introduced in November 2015 and guest houses would be exempt from the tax.

Jihad said the income from the green tax would be used for water, sewerage, and coastal protection projects.

Of the proposed revenue raising measures, import duty revisions and introduction of a green tax would be subject to parliamentary approval, which the finance minister hoped would be granted as the budget was passed.

Legislative compromises to new revenue measures led Jihad to express fears in August that the predicted state deficit for 2014 would more than double in 2014.

State debt

The outstanding stock of treasury bills (T-bills) is currently MVR10 billion (US$648.5 million), said the finance minister.

In his budget speech last week, Jihad observed that the state’s debt would reach MVR31 billion (US$2 billion) or 67 percent of GDP by the end of 2014.

Expenditure on state employees in 2014 would reach MVR15.8 billion (US$1 billion), Jihad observed, while MVR3.2 billion (US$207 million) would have been spent on subsidies and social security benefits.

Consequently, the government was facing serious difficulties in “managing the state’s cash flow and financing the budget” as well as securing loans for budget support, Jihad said.

According to the central bank, the total outstanding stock of government securities was MVR13.6 billion (US$881 million) at the end of September.

Spiralling debt is threatening “the economy’s health”, Jihad said yesterday, with the rolling over T-bills proving to be difficult as the ministry has to plead with banks for extension of repayment periods.

“For example, if MVR600 million matures this week and there is MVR700 million in the public bank account, if the MVR600 million is rolled over there’ll be MVR100 million. How can we run the state with that? It can’t be done,” he explained.

The solution was raising additional revenue by utilising resources such as uninhabited islands, he continued, and appealed for cooperation from parliament. Additionally, the government was trying to extend the periods for repayment of debt.

The interest rate for T-bills is currently 7.5 percent, Jihad said, down from 10 percent before the current administration took office.

“This year we estimate that MVR1.2 billion worth of T-bills have been used by the state for finances. In 2015, it will be MVR440 million,” he noted.

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Parliament approves hiking airport service charge to US$25

Parliament today approved legislation to raise the airport service charge from departing foreign passengers to US$25 from July onward as part of the current administration’s revenue raising measures.

The amendment bill submitted on behalf of the government by Progressive Party of Maldives MP Abdul Azeez Jamal Abubakur was passed with 32 votes in favour.

The government anticipates over MVR100 million (US$6.4 million) in additional revenue from the increased departure tax.

Parliament has also approved other revenue raising measures proposed by the government, including hiking import duties, reintroducing the bed tax until the end of November, raising the Tourism Goods and Services Tax (T-GST), and introducing GST for telecommunications services from May 1.

A proposal by the administration of former President Mohamed Waheed to raise the service charge to US$30 was narrowly defeated in April 2013.

The 1978 law imposing the airport service charge on departing passengers was first amended under the Maldivian Democratic Party government and raised to US$18.5 for foreigners.

The imposition of a similar Airport Development Charge (ADC) of US$25 by Indian infrastructure group GMR was previously a major point of contention for the Waheed administration, which terminated the concession agreement with the GMR-led consortium to modernise the airport in December 2012.

Other bills

A raft of other bills were also passed at today’s sitting of the People’s Majlis, including a bill on the state wage policy that was vetoed by former President Waheed in December 2012.

The legislation proposes the creation of a five-member National Pay Commission chaired by the finance minister with part-time members to determine salaries and allowances for the public sector and authorise pay rises.

The bill stipulates that the commission must consider the cost of living, inflation and the consumer price index in determining wages.

Moreover, salaries should incentivise government employees to work in islands with small populations.

The commission would also formulate standards and rules for determining the state’s pay scale or appropriate salaries based on qualifications and nature of employment.

Legislation on sole proprietors and business registration submitted by the administration of former President Nasheed in 2011 as part of an economic reform package was also passed today.

According to the draft legislation on business registration, the bill seeks to ensure that businesses, partnerships and cooperative societies operating in the Maldives are properly registered; specify what kind of businesses must be registered along with procedures for registration; and oblige businesses to submit information to the Registrar of Businesses.

The bill was also vetoed by President Waheed in April 2012 citing “socio-economic” concerns.

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Parliament approves import duty hikes

Parliament has approved amendments to the Import-Export Act to raise import duties on a range of goods as part of the current administration’s revenue raising measures.

The amendment bill submitted on behalf of the government by MP Mohamed Rafeeq Hassan was passed with 34 votes in favour and 19 against at yesterday’s sitting of the People’s Majlis.

Once the amendments (Dhivehi) are ratified by the president, a 15 percent tariff will be reintroduced for construction material, articles of apparel and clothing accessories, silk, wool, woven fabrics, cotton, man-made filaments, wadding, special yarns, twine, cordage, ropes, cables, carpets and other textile floor coverings, lace, tapestries, trimmings and embroidery.

Tariffs will also increased from the current zero percent to five percent for sugar confectioneries and diesel motor oil and raised from 10 to 15 percent for organic chemicals and compounds of precious metals, rare-earth metals, radioactive elements or isotopes.

Custom duties for vehicle seat covers will be raised from 35 percent to 75 percent.

While custom duties for organic and chemical fertilisers and pesticides as well as for live chickens, ducks, turkey, quail, and chicks will be eliminated, duties for polythene bags and items that contain hydrochlorofluorocarbons (HCFCs) will be hiked to 400 percent and 200 percent respectively.

The tariff hikes reverses changes brought to the law when import duties for most items were eliminated in late 2011 by the administration of former President Mohamed Nasheed ahead of the introduction of a Goods and Services Tax (GST).

Import duty was also eliminated for food items – with a few exceptions such as bananas, mangoes, watermelons, and papaya to protect the local agriculture industry – as well as for construction material, fabrics and garments, paper and books, environment friendly goods, paints, floor coverings, footwear, steel, medicine, medicinal machineries and products, fertilisers, electric vehicles, cosmetic goods and domestic appliances.

During yesterday’s final debate on the government-sponsored amendments, MPs of the opposition Maldivian Democratic Party severely criticised the indirect tax hikes, contending that the burden of increased prices of goods would be borne by ordinary citizens.

In a press statement yesterday, newly-appointed Maldives Monetary Authority Governor Dr Azeema Adam predicted a rise in the inflation rate as a result of hiking tariffs.

The central bank previously estimated the inflation rate to hold steady at four percent as global commodity prices were expected to decline this year.

The Maldives Customs Service meanwhile revealed last week that revenue in March increased by 12 percent compared to the same period in 2013 on the back of a 30 percent increase in imports.

“Total revenue collected in March 2014 was MVR 139.7 million, while it was MVR 124.8 million in March 2013,” MCS said in a statement.

“Importation of fuel (such as diesel, petrol and jet fuel) shared 36 percent of total imports in March, twice the value of food items imported during the same period. Third most imported category of goods in March was machinery and electronics which accounted for 15 percent of total imports in March.”

Exports, however, dropped by 65 percent last month compared to the same period last year, which was “linked to the 97 percent reduction in the volume of exports by the state-owned Kooddoo Fisheries Maldives Ltd, whose main export is Frozen Skipjack Tuna to Thailand.”

Customs also revealed that imports in the first quarter of 2014 amounted to MVR7.1 billion, which represented an 11 percent increase compared to the first quarter of 2013.

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President ratifies revisions to tourism and tax legislation

President Abdulla Yameen has ratified revisions to the Maldives Tourism Act and the Goods and Services Act today.

The amendments were passed at an extraordinary sitting of the People’s Majlis and will allow the government to hike Tourism Goods and Services Tax (T-GST) from 8 to 12 percent starting in November this year.

The US$8 bed tax will restart in February and will continue until November. The government will also be able to collect resort lease extension fees in a lump sum within two years.

The Finance Ministry had initially estimated that new revenue-raising measures would bring in MVR3.4 billion (US$224 million).

However, amendments were not passed as per the ministry’s proposals, and Finance Minister Abdulla Jihad has said “numbers will not match” in the budget.

Additional revenue raising measures include levying a 6 percent tax on telecommunications, increasing airport departure fees to US$25, leasing out 12 islands for resort development, and revising import duties.

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Parliament approves government’s revenue raising measures

Parliament today passed three bills submitted by the government to raise additional revenue anticipated in the 2014 state budget.

The revenue raising measures approved today include hiking the Tourism Goods and Services Tax (T-GST) from eight to 12 percent in November, reintroducing the discontinued US$8 bed tax starting this month, and requiring resort lease extension payments to be made within two years.

While the two amendments to the Tourism Act were voted through 38-18, the amendment to the Goods and Services Tax Act was approved 39-18. The changes will take effect once signed into law by the president.

The passage of the amendment bills was greeted with applause from government-aligned MPs.

MPs of the opposition Maldivian Democratic Party (MDP) voted against all three pieces of government-sponsored legislation, contending that the tax hikes would adversely affect the tourism industry.

“Numbers will not match”

The government had initially proposed collecting resort lease extension fees within three months, collecting bed tax throughout this year, and raising T-GST in July.

However, the parliamentary subcommittee that reviewed the legislation consulted the Maldives Association of Tourism Industry (MATI) last week and recommended revising the government’s proposals.

Representatives from MATI opposed continuation of the bed tax alongside the T-GST increase.

Appearing before the subcommittee, MATI Secretary General Ahmed Nazeer also questioned the practicality of collecting resort lease extension fees upfront.

Only 17 out of more than 100 resorts offered the opportunity by the administration of former President Mohamed Nasheed to extend leases with a lump sum payment were able to do so, Nazeer said.

Resort owners had amended their lease agreements to pay extension fees in installments during Dr Mohamed Waheed Hassan’s administration, Nazeer noted, and revising agreements for a third time could present legal challenges.

Government-aligned Jumhooree Party Leader Gasim Ibrahim – who chaired the subcommittee – meanwhile told local media following the revisions that the bed tax and T-GST hike would overlap in November, after which the former would be discontinued.

The decision was made to compensate for the loss of income from the bed tax in January, the business magnate and resort owner explained.

Finance Minister Abdulla Jihad told local media last month that the Majlis’s failure to extend the bed tax would result in a revenue shortfall of MVR100 million (US$6 million) a month.

Moreover, in the wake of the subcommittee’s revisions, Jihad warned that the projected MVR 3.4 billion (US$224 million) in additional revenue – which accounts for 18 percent of the record MVR17.95 billion budget passed for this year – could not be realised in full due to the changes.

Following remarks by Progressive Party of Maldives MP Moosa Zameer at the subcommittee last week – suggesting that pro-government MPs supported abolishing the bed tax in favour of increasing T-GST – Jihad told Minivan News that the government’s stance had not changed.

“It has not changed. And if the government does not go on with the bed tax, the numbers will not match in the budget,” he said.

Meanwhile, parliament yesterday accepted for review amendments submitted by the government to revise import duties.

In addition to raising tourism taxes and custom duties, other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

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Parliament accepts bill on revising import duties

Parliament today accepted legislation on revising import duties as part of revenue raising measures proposed with the 2014 state budget.

The amendments (Dhivehi) submitted to the Import-Export Act by MP Mohamed Rafeeq Hassan on behalf of the current administration was accepted with 40 votes in favour and 20 against. The amendment bill has been sent to a committee of the full house for further review.

The bill proposes raising custom duties on a number of items from the current zero rate to five, 10, and 15 percent or higher. The items include diesel, sugar, sweets, cotton, rope, carpets, textiles, fur, man-made filaments, ready-made garments, and steel.

In addition, the import duty for vehicle seat covers would be raised from 30 to 50 percent.

If passed into law, import duties for polythene bags and items that contain hydrochlorofluorocarbons (HCFCs) would be hiked to 400 percent and 200 percent respectively.

Conversely, custom duties for organic and chemical fertilisers as well as pesticides would be reduced to zero percent.

Presenting the draft legislation, the MP for Fuvahmulah North said that the main purpose of the amendments was to increase tariffs on machinery and equipment that uses HCFC gas, and to reduce tariffs on machinery and equipment that uses ozone-friendly gases.

“Similarly, import duties for some goods will be reduced to encourage poultry and environment-friendly farming,” he said.

The import duty hikes were proposed in light of the persisting dollar shortage and rising commodity prices in the world market, he added.

In the ensuing preliminary debate today, Maldivian Democratic Party (MDP) MP Abdul Ghafoor Moosa called the proposed hikes “unacceptable”.

“Taking additional taxes from the public not too long after we introduced taxes will impose a burden on citizens,” Ghafoor said.

He contended that passing the income tax bill should be a higher priority for the Majlis as the tax would only be paid by those earning above MVR30,000 (US$1,946) a month.

Import duties were last revised in November 2011 – concurrently with the introduction of the Goods and Service Tax (GST) – by the MDP government as part of its economic reform package.

Custom duties were eliminated at the time for construction material, foodstuffs, agricultural equipment, medical devices, and passenger vessels and duties were reduced for items such as furniture and kitchen utensils.

Meanwhile, a parliamentary subcommittee tasked with reviewing government-sponsored legislation – intended to raise the Tourism GST, reintroduce the discontinued US$8 bed tax, and mandate the payment of resort lease extensions as a lump sum – has today completed the review process and submitted its report to the full Majlis committee.

The report will be debated at tomorrow’s sitting of parliament, after which the amendments to the GST Act and Tourism Act would likely be put to a vote.

Other revenue raising measures proposed by the government include raising airport departure charge for foreign passengers from US$18 to US$25, leasing 12 islands for resort development, and introducing GST for telecommunication services.

In December, parliament passed a record MVR17.5 billion (US$1.16 billion) budget for 2014, prompting President Abdulla Yameen to call on the legislature to approve the revenue raising measures to enable the government to finance development projects.

The current extraordinary sittings of parliament during the ongoing recess are being held at the request of government-aligned MPs, who contended that the Majlis’s failure to approve the revenue raising measures was hampering the implementation of the budget.

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