The Fiscal Committee’s report which has been made public by Finance Minister Professor Biman Prasad has proposed four revenue measures for the Government to take.
The Committee has proposed that corporate tax be increased to 25 per cent (with some relief for corporate SMEs), Value Added Tax (VAT) to be increased to between 12.5 per cent and 15 per cent with no zero-rating on essential items.
The other two proposed measures include increasing the departure tax to return to $200 per passenger by 2025and increased Customs revenue (particularly on liquor) balanced by new expenditure measures including increased social welfare spending and targeted direct assistance to lower-income households and increased capital expenditure on infrastructure and health.
The Committee states that the mix of revenue and spending options is a matter for Government to elect, not for the Committee to prescribe. However the Committee believes that Government must target a reduction in the debt to GDP ratio of lower than 70 per cent in 10 years’ time.
“This can only be achieved with strong Government leadership, both in communicating clearly with the people on our current difficult position; and in the next 12 months developing, in consultation with the people, a national vision and medium and long term economic plans which set, among other things, fiscal targets against which Government’s fiscal management can be measured.”
“Legislatively the Government must extend its hand to the Opposition to become part of this, even if this is rejected at first, to build consensus on “big issues” and give to investors and consumers longer-term certainty and predictability in policy-making, regardless of which party is in power.”
The Committee says the Government must also bind itself to rule of law and proper accountability for its actions and ensure that the judiciary is made more efficient and an effective source of dispute resolution and legal certainty.
“We also recommend that the Government share more information to ensure open discussion and dialogue on economic matters and better accountability to the people on its own economic performance.”
“Committees like ours come and go; recommendations in many reports have sat unactioned for years. We urge a different approach to the recommendations that the Government chooses to follow – that they are treated not as jobs for the civil service to attend to between its other responsibilities, but as projects for “dedicated, empowered, independent” (as we call them) teams of people, including private sector and technical experts, to put comprehensively into action.”
“We consider whether Fiji, too, needs a separate agency dedicated to reforms in improved Government expenditure, cost recovery and asset management.”
“Finally we bring to Government’s attention two particular areas of focus for economic growth and social inclusiveness – MSMEs, with huge potential to make economic impacts where they are most needed; and in improving economic opportunities for indigenous people – though, as we have observed, the focus on indigenous economic opportunities need not involve taxpayer funds or be at the expense of any other community.”