Minister for Finance Professor Biman Prasad says Government lost $4 billion in revenue, for poor and unsound tax policies implemented, in the last decade.
Prof Prasad said this increased Fiji’s exposure to shocks in the market or when disasters struck.
Speaking at the Fiji Institute of Chartered Accountants Congress 2023, the Deputy Prime Minister said the previous Government plans to reduce VAT from 16 per cent to nine per cent in 2016, increase tax threshold from $16K to 30K in 2017 and to reduce corporate income tax reduced from 28 per cent to 20 per cent in 2012.
Prasad said these decisions were no doubt politically motivated – and that in the last 10 years, the Government was deprived of an estimate $3 or $4 billion in revenue that was needed to fund Government services, infrastructure and investment.
“However, the previous Government kept spending, as if it had this money. The Government ran deficits that repeatedly exceeded the rate of Fiji’s economic growth… If Government debt is growing faster than your economy, and then obviously, debt to GDP ratio is going to increase.”
The Minister highlighted that economic growth was not fuelled by private sector investment or exports – it was consumed with debt.
He said Government borrowing and spending freely is not difficult to grow the economy – however, sooner or later; Government must pay the price for it.
Prof Prasad added that Fiji’s economy is a facing a triple threat – failing infrastructure, Government debt level and Government indebtedness.