The Coalition Government will pump over $800 million into the economy to directly support households, workers and the vulnerable—anchored by a major cut in VAT and new spending across social protection, education and transport.
From August 1, VAT will be reduced from 15 per cent to 12.5 per cent, a move expected to deliver $250 million in tax relief. When added to the continued zero-VAT rating on 22 essential items, the total tax relief for consumers reaches $500 million.
“This is a total of $500 million in VAT relief for our people,” Finance Minister Professor Biman Prasad said. “We are putting people first and providing real relief.”
To tackle rising costs further, all civil servants will receive a 3 per cent pay rise from August—on top of a 7–20 per cent increase already awarded last year. All social welfare recipients and government pensioners will receive a 5 per cent boost in monthly allowances.
A $10 million bus fare subsidy will also see all passengers paying 10 per cent less on fares, with Government picking up the cost difference.
The $200 Back-to-School Assistance will continue in 2026, with a $40 million allocation. A further $25 million has been set aside for electricity, water and medicine subsidies.
Prof Prasad warned businesses not to hoard the tax and duty cuts.
“It is unjust and unethical for businesses to pocket these reductions and deprive our ordinary people of the much-needed price relief. This time it will not be tolerated.”
