Thursday, June 11, 2009

Is this the right time to reduce import duty?

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.]


Anonymous said...

Walnut, Hazelnut, Dhunburinut, FeeFoa,peanut, pea brains ......Maldivian MPs
The brains of Maldivian MPs should be preserved for future generation as their gray matter is brand new has been rarely used

Anonymous said...

DRP and MDP has the wrong focus.

First the Majlis should pass a bill on valuation of goods coming in. This is urgent.

Recent cases from Maldives Customs has shown that Government revenue can be increased many folds if goods are not valued arbitrarily.

Due to poor valuation codes, Government lost Millions of dollars from Sultans Speed Launch. Imagine the total loss to the treasury everyday.

Anonymous said...

Anon 7:59, you are absolutely right. Arbitrary evaluation not only loses revenue, it also leads to high corruption. Corruption always benefits big businesses at the expense of the common man and the government.

Anonymous said...

Rumors may be baseless but they must be investigated. Stories of customs officers getting rich beyond imagination are legendary. Sometimes there is smoke without fire, but not always. Which government institution does the investigation? Anti Corruption Commission? Hehehe.

Anonymous said...

Customs duty is a regressive tax (which affects the poor more). It is also against free trade treaties. So it must be eliminated.

meekaaku said...

Reducing duties on food and other basic items is a good thing. Excessive government expenditure is not a good thing for the economy. If this law is going to reduce government income, maybe the government should learn to live within its means. big governments, big budgets are not good.

Excessive borrowing, debt and money printing (causing inflation) is robbery of the future generation.

Not that the huge no of state ministers etc is a reduction in govt spending.

Anonymous said...

Anni govt inc Trade Minister stupid. Traders(viyafaari verin) will not pass the reduced import duty to customers with lower prices.

Anonymous said...

I dont know how this is gonna affect me. Ever since I started working I have been unable to meet ends for only one reason. Coz I have to live in a rented house where the rent of even a single room is higher than my salry from the government. Funnything is Im a graduate and single and still cannot earn enough to pay this rent.So Im forced to share a room with 6 people including my parents. I guess, this rent is the biggest issue we have currently,suffice to say lack of proper housing schemes for people who are forced to live in Male coz of jobs etc. For someone who dont pay rent and owns a house in Male this would be a joke and they will say why dont you go to your island. I would love to if only I could get a job which is proportionately appropriate for my education. I urge our MPS, to look in to the crux of the matter. Our whole life we are suffereing from this rent and your happily debating, how to make the buisnessmen richer and richer.

Anonymous said...

To Anon June 13,1.20 AM.
Now there are loads of high paying jobs in the provinces. Please read the papers.