Our suggestion of reducing the pay of civil servants does not mean they will lose their jobs – FIA

The Fiji Institute of Accountants says their suggestion of reducing the pay of civil servants does not mean they will lose their jobs.

While responding to questions by Legend FM News, the Institute says all sectors of businesses have in one way or another resorted to pay cuts or reduced hours to survive during this time and employers, where possible, will ensure that their employees are at least earning a wage, even if reduced, to be able to provide the basic needs for their families.

They further say while the tourism and hospitality sectors may have completely laid off employees, others are on a reduced salary or reduced work-week. The Institute adds to this end, we need to change the narrative and also consider those in our communities who have actually lost their jobs and who also have commitments but now have nothing to fall back on and are really struggling.

It says in this way, funds can be diverted to provide assistance to those groups of people, while civil servants still have their jobs, albeit at a reduced rate.

On the issue of increasing VAT to 12.5 percent, the FIA says VAT is a broad-based tax, most VAT revenue is derived from the higher income earners due to spending patterns, and there are avenues that may be considered by Government to assist the disadvantaged, while increasing VAT to 12.5%.

It further says this will ensure that Government revenue is increased while still catering for the interests of the disadvantaged in the community adding that VAT is Government’s major source of revenue and is likely to reduce further due to the reduction in economic activity in Fiji.

They also say other revenue sources such as Income Tax are expected to reduce significantly, as the majority of businesses are experiencing reductions in revenue or huge losses from the impact of COVID-19 on our economy and the impact on revenue from income taxes is expected to carry forward into future years, as companies can claim and offset tax losses against its future taxable income.

It adds that government revenue from Customs Duty is also expected to reduce significantly following the unexpected reduction in duties for a wide range of items in last year’s Budget.

They say their submission included a suggestion to review certain import duties to provide assistance to local manufacturers, while increasing customs duty revenue for the Government.

The FIA adds Government revenue from ECAL has been affected due to the downturn in tourism and the hospitality sector and the question now is, where else can Government derive revenue to meet its expenditure and the needs of our people, especially those who have been badly affected by COVID-19.

The FIA says it should be noted that their submissions take a holistic approach and covers Fiji’s broader economic situation, while considering any immediate changes required.

They add it takes time, sometimes years, to bring about reform and for example, their submissions over the years had advocated for the simplification in the number of taxes, and they had called for the removal of Service Turnover Tax and Stamp Duty, and the reduction in Departure Tax.

They say after a few years of advocating for this, the Government made the decision to remove / reduce these taxes last year.

Minister for Economy, Aiyaz Sayed-Khaiyum will deliver the 2021/2022 National Budget address at 7.30pm on the 16th of July.