Deputy leader of the ruling Progressive Party of the Maldives’ (PPM) parliamentary group Moosa Zameer has supported abolishing tourism bed tax if the Tourism Goods and Service Tax (T-GST) is raised from 8 to 12 percent.
Reintroducing the US$8 tourism bed tax, which was discontinued on December 31, 2013, is among the raft of revenue raising measures proposed by President Abdulla Yameen.
However, speaking at an eleven member sub committee set up to review the government’s revenue raising measures, Zameer said that government aligned MPs now believed bed tax should be abolished if T-GST were to be increased.
Finance Minister Abdulla Jihad has denied any change in the government’s stance.
“It has not changed. And if the government does not go on with the bed-tax, the numbers will not match in the budget,” Jihad told Minivan News.
According to the Madives Tourism Act, bed tax must be abolished within three years of the introduction of T-GST. The Finance Ministry has said discontinuation of bed tax will cost the state MVR100 million (US$ 6.4 million) every month.
The government expects MVR3.4 billion (US$ 224 million) from revenue raising measures. These also include revision of import duties, raising airport departure charge for foreign passengers from US$ 18 to US$ 25, leasing an additional 12 islands for resort development, introducing GST for telecommunication services, and collecting resort lease extension in advance.
Government aligned MPs requested the People’s Majlis hold an extraordinary session during the ongoing recess, contending that failure to pass the revenue raising measures will hamper the implementation of the 2014 budget.
Meanwhile, the Maldives Association for Tourism Industries (MATI) has questioned the practicality of collecting resort lease extensions in a lump sum.
Speaking at the sub committee yesterday, Secretary General of MATI Ahmed Nazeer said only 17 out of more than one hundred resorts had paid resort lease extension fees upfront during former President Mohamed Nasheed’s administration.
Nazeer pointed out that the Civil Court had said the government could not ask for resort lease extensions upfront during Nasheed’s tenure.
Further, resort owners had amended their agreements to pay lease extension in installments during President Dr Mohamed Waheed Hassan’s administration, and as such it would be difficult to amend legislation, Nazeer said.
Then Governor of Maldives Monetary Authority (MMA) Fazeel Najeeb at the time opposed many of those measures, arguing that asking resort owners to pay lease extension fees upfront was robbing the state of future revenue for a “temporary benefit.”
Opposition Maldivian Democratic Party (MDP) MPs said changing agreements could reduce investor agreement in the country.
MDP has described the government’s revenue raising measures as excessive.
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