Munawwar: Maldives does not have a regressive tax system

Minister of Finance and Treasury, Ahmed Munawwar has commented that Maldives does not have a regressive tax system.

Munawwar made the comment during the second meeting with the budget research committee of People’s Majlis, in response to concern raised by Maradhoo MP Ibrahim Shareef that the tax system of the country was turning decidedly regressive.

“It regressive tax is being taken and no progressive income tax – this is something the government should think about at some point – and opt for a progressive tax system.

Otherwise, the income gap between the rich and the poor will widen and the people will grow more discontent. This is a major social issue even now,” said MP Shareef.

Minister Munawwar said that allegations the tax system in Maldives was turning more regressive was false.

“It is incorrect to say Maldives has a regressive tax system. BPT and tax on land is taken now.

This is a progressive tax system. More money will be taken from the rich. And more will be taken as businesses develop,” said Munawwar.

He said the current tax system was held in high regard by the World Bank and Asian Development Bank. And that the changes to the tax system within the past five-year period were minor changes when compared to the rest of the world.

“The tax system cannot be reformed overnight. It needs to be developed gradually in line with external factors so that it does not shake up businesses,” said Munawwar.

He said it was the government policy to expand the tax base and increase income from taxation.

“For instance, if tourism develops, if businesses develop, we will increase our income through that,” he said.

Munawwar said the government was working continuously with other relevant agencies to fix loopholes within the tax system.

The government has submitted plans for additional taxes; congestion tax, airport development tax, and increasing import duties on some products for the approval of the People’s Majlis with the projected State budget for 2017.