Finance Minister Aiyaz Sayed-Khaiyum says there is a need for a progressive taxation system so that those earning less can benefit more.

The Value Added Tax or VAT will come down to nine percent from 1st January, compared to fifteen percent charged currently.

Currently VAT is not applicable on oil, tin fish, flower, rice, tea, powdered milk, and kerosene and prescription medication however from January first this will change.

Sayed-Khaiyum says the government will also be able to identify unscrupulous traders.

“By having VAT apply on everything – by bringing it down – we are also saving money. Its stops the shopkeepers and some supermarkets who are stealing from the system – it stops them from stealing. Because when they file their VAT returns there are certain items that they sell as VAT exempt and some of them are not – so it gives them the ability to steal from the system.”

VAT was first introduced into Fiji in July 1992 at the rate of 10%. It later increased to 12.5% and, as from 1st January 2011, to 15%.