Deputy Prime Minister and Minster for Finance, Professor Biman Prasad says there have been wild assertions from some Opposition members about how cost of living has increased because of new tax measures but they do not realise that Fiji is still transitioning from COVID while FijiFirst MP Vijay Nath says the higher cost of living, increase in VAT and inflation is inevitable and is led by reduction in consumer spending and considerably diminishing tax revenue.
While debating the Fiji Revenue and Customs Service 2018–2019 Annual Report, Professor Prasad says there is job growth and FNPF data shows salaries and wages have actually increased in the formal sector by about 10 to 12 percent which is also a factor in the demand for a tight labour market.
He says they have lost some labour but there are jobs being created as well.
Professor Prasad says contrary to assertions made by Nath that tax revenue will be lost because disposable income has gone down and cost of living is so high, net tax collection for October this year is $269 million, $26 million or 10.7 percent above the forecast compared to the same period last year.
While responding to Nath where he is urging Professor Prasad to consider updating the Consumer Price Index basket as it relies on outdated data from 2008, Professor Prasad says the base used to calculate is from 2014 and not 2008 but he agrees with Nath as it is an old basket and things have changed, consumption pattern has changed and they need to look at the weight given to each good and service.
Professor Prasad says they have brought back the government statistician who was unceremoniously removed by the previous government.
He says the Bureau of Statistics is already working on re-basing the calculation of CPI and they are also going to re-look at the basket.
Nath says Professor Prasad had said that ANZ Bank should be careful while making such wild projections regarding the inflation rate because the methodology they use is based on the gross value added of the retail sector.
He says Professor Prasad explained that inflation is measured by the Consumer Price Index based on the representative basket of goods and services purchased by the consumer with different weights.
