Male, Maldives (CU)_ According to Saruvash Adam, the Chief Financial Budget Executive of the Finance Ministry, the government plans to raise the Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) effective from January 2023. He made these remarks during a media interview. While commenting on the program, Saruvash noted that despite the fact that the government needs tax revenue to deliver services to the people, there will always be complaints and concerns made against any amendments to the tax system.
In addition, Saruvash warned that these modifications will have unintended consequences, such as an increase in inflation or an increase in the cost of products and services. Highlighting that a period of sharply rising inflation is not the best moment to make changes to the tax system, Saruvash emphasized that these adjustments are necessary to balance the government’s expenses. He indicated that a sudden reduction in government expenditure would have an impact on the populace. Accordingly, he emphasized that this might result in the state being unable to pay its employees or offer subsidies, or even to a decline in the quality of state-provided services.
Therefore, he emphasized that it is essential for the government to collect more taxes. Indicating that the state has no other choice at this time, Saruvash also noted that the decision to raise taxes collected from the residents was reached after extensive deliberation. In addition, in response to the tourism industry’s worries with the hike in TGST, Saruvash remarked that their greatest issue has always been the late notices they receive about the adjustments. As a result, he added that talks were held with industry players, who concur that the nation’s economy must be handled.
Ibrahim Ameer, Minister of Finance revealed the plan to hike the GST and TGST on July 5, 2022. Minister Ameer said during a press conference that the decision has been taken to increase the GST to 8 percent and the TGST to 16 percent. Accordingly, the administration decided to hike the GST from 6% to 8% and the TGST by around 4%. According to Minister Ameer, the administration has agreed on budgetary anchors to maintain a sustainable fiscal situation. Minister Ameer referred to the global economic shifts and emphasized that initiatives must be taken to maintain the country’s fiscal situation at a sustainable level.
