Finance Minister deflects VAT cut question, defends government relief measures

Deputy Prime Minister and Minister for Finance Biman Prasad declined to directly answer whether the Government would reduce value added tax (VAT) below 12.5 per cent, instead defending existing policies and criticising the Opposition's motives.

Responding to Opposition Member of Parliament Premila Kumar's question in Parliament yesterday about further reducing VAT to help people deal with cost of living, Mr Prasad said: "She's hoping that we'll get some political points for her.

Ms Kumar had presented Consumer Council of Fiji data showing price increases for items including eggs, frozen vegetables and cocoa between 2022 and 2025, arguing these demonstrated the need for further VAT reduction.

Rather than confirming or rejecting future cuts, Mr Prasad explained that price changes must be viewed within the broader context of a consumer price index basket.

"You can't expect the price of eggs in 2010 or 11 or 12 was this much is going to be the same in 2026," Mr Prasad said.

He stressed that the government had already implemented significant tax relief measures, including reducing VAT from 15 per cent to 12.5 per cent and maintaining 22 zero-rated items. These measures, combined with duty reductions on essential items, put approximately $500 million directly into citizens' pockets, he said.

Mr Prasad stressed that addressing cost of living required focusing on both prices and incomes.

"What we need to do is to focus also on the income side," he said, pointing to minimum wage increases from $4 to $5 and salary increases for civil servants. The minister acknowledged that some price increases were unavoidable due to global factors.

"If the price of butter goes up in New Zealand, we're importing all our butter even with zero duty, even with zero VAT, the prices will go up," Prof Prasad explained.

He maintained that official figures showed monthly inflation from January to August averaged negative one per cent.