Finance Minister Ibrahim Ameer has confirmed that the government plans to hike taxes.
The government on Monday had shut down rumors that GST and TGST would be raised to match rising prices and make up for the earnings gap.
However, a day later, Minister Ameer had confirmed that they were in discussions to implement measures to combat rising costs and bring in revenue.
The Ministry is proposing hiking GST from six percent to eight percent, while TGST will be raised to 16 percent from the present 12 percent. He also said the Ministry is looking into reforming subsidies and State-Owned Enterprises to lessen budgetary dependence. He also said that the Government would be halting major new projects.
Both recurrent and capital expenditures were running at quite high levels, Ameer stressed. Therefore, he said it was imperative that budgetary controls were put in place. If left unchecked, Ameer said that it was very likely that the state would have to put forward a budget of MVR 46 billion (US$ 3 billion) for 2023.
“If policies are left unchecked, then expenses would heavily overtake earnings. If we fail to secure more income, check expenses, we will have to present a budget of around MVR 46 billion (US$ 3 billion) for 2023. This is not something we can finance based on the global economy and economic situation,” he said.