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Plugging Holes To Avoid Loss Of Tax Revenue

There is no doubt that our economy is on a growth trajectory. And like any country, when it experiences growth, consumption increases. Up to 12 per cent increase was noted
05 Oct 2015 13:24
Plugging Holes To Avoid Loss Of Tax Revenue
There is no doubt that our economy is on a growth trajectory. And like any country, when it experiences growth, consumption increases.

Up to 12 per cent increase was noted in imports of consumption goods for September, cumulative to June.

Higher net Value Added Tax collections (8.5 per cent) cumulative to August, was recorded in latest figures released by the Reserve Bank of Fiji.

But while VAT collection is going up locally, unfortunately Government has noted that VAT collection at our borders is either stagnant or going down.

By the looks of the numbers, imports have definitely gone up. So if we are importing more, then why is it our VAT collections at the borders are not reflected?

The Attorney-General and Minister for Finance, Aiyaz Sayed-Khaiyum, seems to have rightfully pointed out that there are anomalies in terms of VAT collections at our borders.

As a result, our country/Government could be losing out millions in revenue if not more through these anomalies noted in VAT collection.

This money could easily be allocated for the socio-economic development and meet the needs of the needy.

Rather, this money is being absorbed by the already-elite of our society making the concept of the “rich getting richer” true.

However, it would not be fair to blame the dishonesty of a few on the rest of those who are law-abiding.

Therefore, now is the time to act – by the Government and by those who are responsible for these anomalies.

Government should take serious action against these people and create a system whereby there is no room for such anomalies and those who are caught, are severely punished.

For those who are responsible for the anomalies, the action they need to take is to put an end of this or else face the full brunt of the law.

Mr Sayed-Khaiyum has already indicated that laws will soon be introduced to ensure those who are involved in these  activities will no longer be able to carry on because the system will be tightened up.

Some major announcements are expected soon in regards to Government’s findings on this matter.

Another area of concern which has been consistently been highlighted yet it continues even today is duty.

Government has over the years made a number of items zero-rated for duty meaning the importation of the items will not require any duty to be paid.

The ultimate aim of this was so that more people are able to afford not just the basic products, but also luxury items.

However, despite this, it is still noted that businesses do not reduce the retail price despite the zero duty.

But unfortunately, we do not have any entities responsible to Police the prices – not even the Fiji Commerce Commission.

Another unfortunate fact is that not everything can be price controlled.

It is understood Government is working to come up with laws to police pricing without really implementing price controls.

This would indeed ensure that the benefits of price reductions is indeed passed on to the consumers.

These are two major issues faced by the Government. Now we will have to wait and see if decisions are taken to tackle these in the 2016 National Budget which will be announced on November 6.

 

Feedback:  rachnal@fijisun.com.fj

 

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