Tax hike may lead to $50 million tourism loss, MATATO warns
MATATO's statement accused Minister Ameer of giving “flawed” information to the IMF and the World Bank.
By
Ahmed Naif
Maldives tourism industry may face a loss of $50 million in the first three months or first quarter of 2023 due to the increase in T-GST, Maldives Association for Travel Agencies and Tour Operators (MATATO) said on Thursday.
The president has ratified the GST and TGST hike bill, which will come into effect from 1 January 2023. The change includes:
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GST from 6% to 8%
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T-GST from 12% to 16%
Expressing displeasure over the tax hike, MATATO said in a statement that it was not possible under EU rules to change the prices of packages sold in advance with the increase in T-GST. Noting that many European tour operators have also lobbied the government to reverse the decision, MATATO said small and medium-sized tourism businesses will be the ones suffering the biggest loss.
Here are some of the points that MATATO pointed out in the statement:
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In the first three months of 2023 (Quarter 1), over $50 Million will be lost to the tourism industry from booking cancellations alone; which includes resorts, liveaboards, guesthouses, hotels and other related businesses.
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Maldivian workers in the tourism industry will see nearly MVR 2,000 reduction in service charges, as service charges are calculated after deducting GST.
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The decision to hike taxes was not taken after carefully analysing its impact and holding extensive consultations with industry experts, although the government said otherwise
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Finance ,inister Ibrahim Ameer's comments on tax hike were “spurious and inconsistent”
MATATO accused Ameer of giving “flawed” information to the IMF and the World Bank. While the minister had not specified what the state was willing to do to cut down government spending, MATATO said it was "grievous" that the tax hike was asserted as the only step forward for the economy.
"MATATO calls that the government take immediate action to safeguard our economy and rectify these grievous directives, including the parliament to intervene as recent statements by minister Ibrahim Ameer have been misleading and the minister isn't capable of holding such a role and should step down immediately," the statement read.
MATATO urged the government to work towards a swift solution to the problems faced by the tourism industry due to the increase in T-GST. It also called on the government and parliament to hold Ameer accountable.
