Listening to the ongoing Majlis debate on the Import Export Act, where Member after Honorable Member spoke about reducing the import duty on a variety of items, it appears as if they believe the national treasury is bloated with loads of surplus cash. But as is painfully obvious, the reality is different. In fact, the financial situation is so precarious that unless additional revenue is generated the budget will be insolvent at the end of the year.
Over the past one and half years the budget has been overwhelmed with ill-advised salary hikes, unaffordable overtime payments, fanciful allowances and, above all, reckless spending to woo the electorate. As of now the ability to pay salaries is also in doubt, let alone implement programs to fulfill government promises. In this situation, talking about cutting an important source of government revenue appears out of place.
Import duty normally accounts for about a third of government revenue. If the proposals currently being discussed are adopted, it would lead to a revenue loss amounting to Rf 500 million, according to Economic Development Minister Mohamed Rasheed.
MPs supported reducing import duty believing it would reduce the cost of living. However experts differ. They say that even if duty is waived on diesel and essential food items, it would not help the people unless the current dollar shortage is adequately addressed. So this may not be the right time to reduce import duty.
[To read details of the Majlis debate click here.]