Tourism tax hike won't affect public, govt MPs say

Ruling Progressive National Congress (PNC) members of parliament said on Tuesday that the proposed amendment to the Goods and Services Tax (GST) Act aims to increase state revenue without adding a burden on the public.

The preliminary debate on the proposed amendment took place during Tuesday's parliamentary session.

The amendment proposes to increase the Tourism Goods and Services Tax (TGST) from 16% to 17%, with the change set to take effect in June of next year.

During the debate, Henveiru North MP Ahmed AIfan argued that the TGST increase would not negatively impact the general public.

He noted that the tax targets those who derive the most benefit from the Maldives' natural resources, suggesting that a one-percentage-point increase in the tax rate would not significantly reduce the advantages enjoyed by businesses in the tourism sector.

"A 1% increase on the largest beneficiaries of our natural resources is not a significant amount. This adjustment does not diminish the benefits to the tourism industry or those profiting from our natural resources," Aifan stated.

AIfan also criticised opposition claims that the TGST increase would place hardships on the public, asserting that the government's intention is to ensure that the common people receive their fair share from those who benefit the most.

Baarashu MP Ibrahim Shujau also supported the amendment, stressing the need to boost state revenue.

He noted that the amendment aims to achieve this without placing additional financial pressure on citizens, aligning with President Mohamed Muizzu's strategy to raise revenue through a 1% increase in tourism tax.

"We have seen the previous government make similar amendments to increase revenue. However, it is regrettable that the increased revenue was not effectively utilised," Shujau remarked.

He emphasised the need for sustainable development within the tourism industry, including efforts to bring unbuilt resorts into operation. Shujau highlighted the importance of promoting tourism and generating revenue to support long-term growth in the sector.

Milandhoo MP Hassan Mufeed added that the government’s intention is to use the increased tax revenue to provide financial support to tourism businesses, retrain the workforce, and attract tourists back to the Maldives.

In addition to the TGST increase, the proposed amendments include adjustments to the green tax: