Business

Government stands to lose $1.5b tax revenue

May 29, 2020 4:25 pm

Minister for Economy Aiyaz Sayed-Khaiyum. [File Photo]

The government stands to lose $1.5 billion or half its tax revenue if the effects of COVID-19 last until the end of the year.

Minister for Economy Aiyaz Sayed-Khaiyum told parliament today that it has lost revenue from Value Added Tax, Environment and Climate Adaptaion Levy or ECAL and Departure Taxes.

He says these are some of tax revenues affected by the closure or borders, the grounding of flights and no activity in the tourism sector.

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Despite this, state funded services have been maintained.

“Our expenditure only decreased by about $300,000 because we wanted to keep up government services in all the ministries including the additional $100m as a response to the COVID-19 crisis.”

Sayed-Khaiyum adds in order to continue to provide services, the government will look at sourcing international loans to shore up its finances when time comes.

“If we get funding from off-shore it also builds our reserves. We’ve seen repatriated funds have become less. Fijians living off-shore are finding it hard to remain in jobs so they have less money to send back home. Similarly, if tourists aren’t coming, your foreign reserves aren’t being supplemented”.

The government is optimistic that local businesses can still drive the economy given that demand for international trade in goods and services remain subdued.

“If the economy becomes even more sluggish, it will be even greater. Our job is to try and put in place various initiatives to encourage confidence. Liquidity is there, try and get businesses to take up funds, boost investment and create jobs”.

The government has announced a number of initiatives targeted at small businesses, saying there is potential for SMEs to flourish in the current economic climate.