Fiscal Review Committee chairman Richard Naidu has recommended the removal of zero value added tax (VAT) from basic food items and a significant increase in VAT, but nothing higher than 15 per cent.
Speaking on the opening day of the National Economic Summit in Suva yesterday, Naidu said it cannot be business as usual and VAT needs to increase but there will be re-targeted support for the poorer people.
Naidu said the nine percent VAT, which according to the Fiji Revenue and Customs Service is costing $160 million a year to the Government, should go up to 15 per cent.
“High income earners benefit from the zero VAT rating the most as they can afford to buy more basic items like flour, rice, cooking oil etc than the poorer people.”
He also highlighted the Committee’s plan to target lower income households and find ways to deliver cash back to them.
Naidu added that they are recommending to the Government that Personal Income Tax remain what it is.