Thorig against plastic bag tax cut; 'Goal may not be achieved'
“If it is a consumption tax, the objective will be achieved if it is taken from the point of sale,” Thorig said.
By
Ahmed Naif
Environment minister Thorig Ibrahim told a parliamentary committee on Monday that he does not support the proposed reduction of the MVR 2 fee or tax on each plastic bag being sold by shops since April last year.
Thorig was summoned to the sub-committee of the committee of the whole house that is reviewing the amendments proposed by the previous government to the Waste Management Act following complaints about the hiked price of plastic bags.
The amendments propose:
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To reduce the fee of MVR 2 charged from the bags to 50 Laari, or
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Complete scrapping of bag tax
The committee members asked the minister to clarify which of the two options was better suited to government policy.
Replying to questions from members, Thorig said the bag fee has not been discussed at the policy level of the ministry and the new government. Although he said it would take some time, Thorig expressed his own views on the matter.
As such, the minister said:
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MVR 2 per bag as it is now is manageable. If reduced to 50 Laari, the whole system will get muddled again
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The government is in the process of formulating a regulation to spend the money collected as bag tax for certain things and plans to do things with the revenue of that fee.
"Through the EPA, the money is going to do important things. This tax money is going to be spent on important things. So we need time to discuss before changing the law," Thorig said.
He said that instead of levying taxes while importing bags, the best rule is to charge MVR 2 per bag at consumer levels.
“If it is a consumption tax, the objective will be achieved if it is taken from the point of sale,” Thorig said.
Finance Ministry officials also told the committee on Monday that if the bag fee is reduced to less than MVR 2, the purpose of the tax may not be achieved. They also expressed concern that it may not reduce the use of plastic bags.
‘Double taxation will be solved with amendments’
Thorig said if the proposed amendment to the law is passed, the problem of charging the fee twice will be solved by exempting the fee from a 50-bag pack. He said he supported the amendment.
According to Commissioner General of Taxation at MIRA, Fathuhullah Jameel, the solution to the problem of doubling the bag fee is to deduct input and output tax as GST is paid. This will provide a permanent solution to the problem of doubling bag fees, he said.
Monday's committee meeting ended giving time for the amendments to be shared with the new government policy committee. Then the amendment will be taken up in the next session of the Parliament, he said.
