Any VAT reduction will not mean automatic price reduction as freight costs can push up prices – Prof. Prasad

Deputy Prime Minister and Minister for Finance, Professor Biman Prasad stresses that any government that comes to power must assess revenue sources carefully, warning that reducing VAT to 10 or 13 percent and removing zero percent VAT items may not necessarily lead to a reduction in prices.

Professor Prasad made these comments after a question from a resident in a public consultation in Davuilevu, Nakasi.

The resident had asked if the government is planning to reduce VAT to 10 percent on food items.

Professor Prasad says reducing VAT does not necessarily mean price reductions for consumers, as prices can increase if the freight cost increases.

The Deputy Prime Minister says without the zero percent VAT on 22 essential items, the government would have an additional $300 million in revenue, which could be used to increase social welfare to assist the poor.

Meanwhile Professor Prasad says the Coalition Government has put more than $130 million directly into the pockets of people over the past three years to provide targeted support and relief.