VAT cut was a mistake: Naidu

Fiscal Review Committee chair Richard Naidu says the Government made a mistake by reducing VAT, arguing the move deprived the State of hundreds of millions of dollars in much-needed revenue.

Speaking at the Dialogue Fiji State of the Economy Dialogue, Mr Naidu said Fiji's limited tax base left few options for raising Government revenue.

"Long story short, if you're going to drastically increase government revenue, which it was necessary to do, there was only one place to go, and that was VAT," he said.

"And that, unfortunately, remains the case."

Mr Naidu said the decision to reduce VAT had weakened Government's financial position.

"For what it's worth, as a sidebar, I think that the government's decision to reduce VAT a year ago, however many years ago, was a mistake," he said.

"It's deprived the government of ... revenue. That is money that the government actually needs."

Mr Naidu said Fiji's personal income tax system offered little room for increasing revenue because most workers fell below the tax threshold.

He said the country faced major spending pressures in infrastructure, health, education and climate resilience that required sustainable revenue sources.