FLP rejects any proposals or moves to increase VAT in the upcoming National Budget

The Fiji Labour Party has rejected any moves to increase VAT in the upcoming 2021/2022 National Budget.

In its submission on the budget, the Fiji Institute of Accountants has proposed that VAT be raised to 12.5 percent and that the 5 percent Environment and Climate Adaptation Levy be scrapped.

However Labour Leader Mahendra Chaudhry says this is not the time to increase a tax which will penalize the poor considering the widespread hardship and suffering inflicted by the COVID-19 crisis.

He says a better option would be to remove the 9% VAT, imposed in 2016 on basic food items as this would provide appreciable relief in these difficult times.

Chaudhry says scrapping the ECAL in return for a 2.5% increase in VAT, is not a fair exchange, as the levy applies to tourism related businesses, coffee shops, restaurants etc with an annual turnover of $3 million or more.

He questions how many of our poor people and those disadvantaged by COVID, some 75 percent of the population, are likely to benefit from the removal of ECAL.

Chaudhry says the focus right now should be on the suffering people, making their lives bearable and on containing the exponential increase in the spread of the COVID virus.

He says Government’s figures released in February 2021 show 115,000 workers have either been made redundant or were working on reduced hours, comprising one-third of the workforce.

The FLP Leader says some 40,000 workers were reportedly laid off from the tourism industry alone.

Chaudhry says this situation worsened in March when the accelerated rate of the virus led to the imposition of border containment zones and lockdowns, particularly in the Central Division.

He says businesses and factories had to close down, and thousands more were deprived of their jobs and weekly pay checks.

Chaudhry says the prevailing highly depressed socio-economic conditions caution against any fiscal measures which will fuel inflation and add to the problems of the ordinary people, as well as businesses.

He says raising VAT will mean paying more for food and other basics, water, electricity, communication, medicines and transport.

Chaudhry questions how can one justify raising a tax that will cut across all sectors of the economy, increasing the cost of goods and services and pushing the already high cost of living to new heights.

He says as it is, the unemployed have received very little assistance from the Government in terms of COVID-19 relief.

Chaudhry believes the majority of the workers have been pushed to fend for themselves by withdrawing their pension savings from the FNPF.