Budget 2024-25

Reducing VAT not an option says Prasad

July 10, 2024 4:50 pm

Finance Minister Professor Biman Prasad confronted several Independent Members of Parliament today, questioning them about their strategy if VAT were to be reduced from fifteen to nine percent.

Professor Prasad pointed out that the government will lose millions in revenue if this were to happen.

He highlights that the current government has maintained a zero VAT rate on 22 essential items.

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Prasad emphasizes that reducing VAT is not an option.

“If we reduce VAT from 15 to 9 percent we will lose 600 million in revenue. For every 1 percent reduction in VAT we lose about 100 million tax revenue, the question is how are you going to compensate for all of these hon Kumar.”

Finance Minister Professor Biman Prasad [Source: Parliament of the Republic of Fiji/Facebook]

Prasad states that the government can only do so much, as there are other factors influencing the prices of goods and services.

“Despite the fact that there is no VAT on these items the prices had increased due to increase in production costs or other associated costs like freight, insurance, storage etc. which is completely be out of our control.”

He adds that relief will be provided where needed.

“As a government we have look at all these options and the Minister for Trade under which FCCC comes is constantly looking at how we can use some of these tools, some of these policies to provide relief to our people and that is being done and I am sure the DPM will be making some of those decisions soon.”

The Finance Minister notes that Fiji’s major trade partners are experiencing high inflation rates.

He explains that due to these trade links, it is natural for import prices from these countries to be high, which significantly impacts Fiji.

He says this is especially true since approximately 50 percent of Fiji’s consumption basket consists of imported items.