Finance Minister Professor Biman Prasad has once again defended the Coalition Government’s decision to raise taxes, saying it was never an easy option, but the country needed this “bitter medicine”.
He said this in response to Opposition MP Faiyaz Koya, who said the country was yet to see what benefits had materialised from economic policies implemented by the Coalition Government.
Mr Koya said by increasing VAT, Government had greatly diminished the spending power of every Fijian, which was now being felt by the business community.
“You can ask most business owners and they will all say the same thing; people are spending less,” Mr Koya said.
“With the cost of shipping greatly increasing due to many global factors and this in turn has increased the cost of goods across the board, to have raised VAT by 6 per cent was just pure stupidity at best.
“It is the Government’s job to make life easier but clearly, this concept is foreign to them. The Coalition Government’s reliance on gas lighting tactics to maintain a positive narrative is unhelpful.”
Prof Prasad hit back, saying Mr Koya was still trying to justify the “voodoo economics” of his predecessor and the FijiFirst government.
He said the Government had to deal with an impending debt crisis and both the International Monetary Fund (IMF) and World Bank had stated there was no other alternative than to increase taxes and re-prioritise expenditures.
“Just like when you are sick, you need to take some bitter medicine, otherwise you will need major surgery or risk your life,” he said.
Prof Prasad also said the economy had returned to pre-pandemic levels much faster than expected in 2023, following a growth of 8.2 per cent.
“We had record levels of visitor arrivals with high yields as tourists stayed a bit longer and spent more than before. This strong performance in the tourism industry had a positive flow on effects on all other sectors.
“We had record level remittances of $1.25billion with spending levels in the economy rising. The interest rate environment remains low to support new investments.
“We had announcements on some of the major private sector projects that’s in the pipeline. So, what is Honourable Koya talking about when he says that business is slow?”
Prof Prasad admitted that there are several challenges in the short term, which include shortage of skills and bottlenecks for ease of doing business. However, he said the Government was committed to streamlining processes and attracting investment into the country.
