Tuesday 16th Apr 2024
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Maldives monetary authority

Cost of goods will surpass govt estimates next year, due to tax hikes: MMA

The Central bank, Maldives Monetary Authority (MMA) has predicted that the cost of goods and services will surpass the government estimates if the Goods and Services Tax (GST) and Tourism Goods and Services Tax (TGST) is increased, next year.
The proposed budget for next year estimated that inflation will be at 5.4 percent in 2023. According to the budget, 2.4 percent inflation is a direct result of increased GST and TGST rates.
Advising the parliament on the budget proposal, MMA stated that while 2.2 percent is the result of increased taxes, the businesses will also incease their prices due the increase in the price of business-related costs, and hence the economy will witness steep inflation.
According to the budget booklet, GST increase will inconvenience the low income population more than anyone else, however, the government argued that the financial stress on these individuals will be softened by the subsidy programs from the government.
MMA noted that the budget proposed by the government does not achieve the goal of reducing budget deficit, the excuse used by the government to sell the GST bill they proposed to the parliament.
The government asserted that the proposed budget embodies a strategic plan to reduce budget deficit, however, next year’s budget deficit is estimated at MVR 8.4 billion, assuming 2023 is financially favorable to the state.