Unfortunately, people like Opposition MP Alvick Maharaj and former Minister for Economy Aiyaz Sayed-Khaiyum continue to lie thinking that it will improve their political fortunes and people who bankrupted their own political party and ran away from parliament should not lecture others about how to manage the country’s economic policies.
This has been highlighted by Deputy Prime Minister and Minister for Finance Professor Biman Prasad as Fiji’s inflation rate dropped to -0.9 percent in April and Maharaj is calling for the government to reduce VAT while Sayed-Khaiyum says the decline in inflation is technical while the economy remains sluggish, confidence is low, and many Fijians continue to struggle under high taxes, reduced assistance, and poor governance.
Professor Prasad says inflation statistics are released by the Fiji Bureau of Statistics, and it is a fact that inflation was negative in April.
He says a negative inflation rate means that overall prices have declined compared to a year ago—there is no debate about this.
The Deputy Prime Minister says the Government had welcomed this decline, which was supported by falling global fuel and food prices.
He also says earlier Government policy measures—such as zero-rated VAT on 22 essential items, increases in social welfare, $650 million in TELS debt write off, the national minimum wage rising to $5 an hour, and an $85 million increase in public sector wages, among others—have been supporting thousands of Fijian families.
Professor Prasad says Maharaj’s claim that the Government has misused the additional VAT revenue is absurd and it is precisely through this additional funding that they have been able to finance various income-support measures for the people and increase allocations to health, water, roads, public asset maintenance, agriculture, and other critical sectors.
He says it was during Maharaj’s Government’s tenure that public finances were abused to feed cronies and political party supporters.
The Deputy Prime Minister says the pilfering of hard-earned taxpayer money under their watch deprived people of essential services and left us with the disaster of a dilapidated health sector, unreliable water services, and crumbling public infrastructure.
He is reminding Maharaj that during their time in government, VAT was already set at 15 percent.
Professor Prasad says there were three VAT rates: zero, 9 percent, and 15 percent and what they have done is move items that were at 9 percent to 15 percent and items already at 15 percent remain unchanged, and those at zero percent continue to be zero-rated—with the additional inclusion of prescribed medicines, bringing the total to 22 essential items.
He says in addition to funding these critical expenditure initiatives, the revenue measures have helped reduce debt level from over 90 percent to around 78 percent of GDP and this significant reduction in debt has enabled the government to rebuild fiscal space to mitigate major external shocks and fiscal disruptions.
Professor Prasad says Maharaj’s calculation that VAT would be $75 on a $500 grocery basket is amateurish and a lie as there are 22 zero-rated items, and if the entire basket consists of these items, the VAT would be zero.
He says if half of the basket is zero-rated, the VAT would be $37.50.
He says a the same time, vulnerable households continue to receive various forms of assistance and social wages funded through the public purse.
Professor Prasad also says Sayed-Khaiyum’s claim that prices have increased over the last two years doesn’t take away his disastrous record during his tenure as Finance Minister from 2014 to 2022, when overall prices increased by over 17 percent, and food prices rose by a staggering 30 percent.
He says it was his policies and dictatorial leadership that ruined this nation—driving up public debt, crippling public infrastructure, hollowing out state institutions, damaging the economy, and leaving a nation that lived in fear.
He adds the Coalition Government has been honest, transparent and open about its economic policies and this has created confidence and this is reflected in increased investment over the last two years.
Meanwhile, Maharaj says the government needs to seriously consider reducing the VAT back to a sustainable level.
He says while VAT brings in major revenue for the government, the government for the past two years has misused VAT collection as government operating expenses are at an all-time high.
Maharaj says reducing the operational cost can substantiate the revenue loss by reducing the VAT to a sustainable level and even after the VAT increase, the government continues to borrow, and the debt level is at an all-time high.
He says while we have an average spending ability within the populace, the government should introduce policies to boost the spending power of individuals.
The MP says the government got it all wrong in the first place two years ago when VAT was increased to 15 percent from 9 percent.
He says while government revenue increased, the spending power of individuals was reduced significantly. The economic growth of a country doesn't just rely on the revenue collected by the government but by the spending ability of the populace.
The MP asks what sense does it make by increasing the VAT when people can't even afford to pay the VAT component.
Maharaj says considering the high cost of living, if someone pays $500 for a cart full of groceries, the Vat component is $75 and for an average household, $75 as a Vat component is huge.
He says if we reduce the threshold of VAT and increase the spending power of the population, the government can reduce the burden of high cost of goods and at the same time have higher revenue collection.
Maharaj says small and medium enterprises mostly survive on the amount of cash flowing within the economy and in two years now, the economy has slowed down.
He says they need to correct this as soon as possible before it goes to a level that is beyond repair.
Maharaj is urging the government to seriously consider reducing the VAT as soon as possible. Sayed-Khaiyum says the Coalition government's celebration of April’s 0.9 percent drop in inflation is misplaced, as the decline is largely technical—stemming from a high base in April 2024—and driven by global factors like falling fuel prices and stable weather, not government action.
He says overall prices are still over 7 percent higher than when the government took office, and economic conditions remain weak, with reduced consumer spending, declining business confidence, sluggish loan uptake, fewer home constructions, and widening inequality.
The former Economy Minister says the government’s tax hikes, lack of tangible support for small businesses, poor governance, and ineffective public services, warning that the economy is stagnant and job opportunities are dwindling despite CPI figures suggesting otherwise.
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