MAJOR political parties say reducing the value added tax (VAT) from 15 per cent to 9 per cent will not necessarily reduce the cost of living for majority of the poor and low income earners in the country.
Reacting to the Tebbutt Times poll on the impact of VAT reduction on the population, National Federation Party (NFP) leader Prof Biman Prasad said the results were “interesting”.
“It proves the point we made in parliament that generally the cost of living for a large majority of the people, especially poor and low income earners would not go down,” Prof Prasad said.
He said while 40 per cent said the cost of living had gone down, it was the other 60 per cent which should be of interest.
“People need to remember that Government had also imposed a VAT of 9 per cent on six basic items which always attracted zero VAT.
“This was a slap on the poor and low income earners and also against the FijiFirst promise in their manifesto before the 2014 election that they will keep the zero VAT on basic food items.”
Prof Prasad said it was generally understood that the low income earners spent a much bigger percentage of their income on basic items, especially food items, and therefore the 9 per cent VAT on basic items had raised the cost of living for them.
Social Democratic Liberal Party (SODELPA) leader Sitiveni Rabuka said the poll was not properly presented to the people.
“They (public) could have been guided on the net effect of the rise in duty, the cancellation of zero rated items and they would have come up to a much higher rate of disappointed people,” Mr Rabuka said.
He claimed Fiji’s poverty rate had increased since the 2006 coup.
“The Government refuses to increase the minimum wage, so for many of our people, for the poorest of the poor, the cost of living is prohibitive and while VAT has been reduced from 15 per cent to 9 per cent, the essential food items which were VAT free, now have 9 per cent VAT imposed, so the cost of the essential food items, which is what the poorest households focus on, has gone up, making life harder for them.
“Further, many of our people remain in temporary shelter given the delay in (Severe) TC Winston rehabilitation efforts by the Government.
“We doubt that their cost of living has reduced or been affected by the reduction in VAT but the imposition of that 9 per cent VAT on basic food items is an added burden on the thousands of families devastated by (Severe) TC Winston.
“When they (people) are poor, a mother and father must battle each day to find the money to feed their children and themselves. They live in the shadow of hunger and want. Up to half of Fiji’s population could be living like that.”
Mr Rabuka said whatever the precise statistics, it must be accepted that hundreds of thousands of people were trapped in poverty.
Opposition leader Ro Teimumu Kepa said the poll results were baffling, with a total of 64 per cent saying their living costs had stayed the same or gone down a little as opposed to 17 per cent and 12 per cent saying their living costs had gone up a little or gone up a lot.
“If you add the 5 per cent national average of those who say their living costs had gone down a lot, which is an overwhelming majority of 69 per cent saying it’s the same or less, as opposed to 29 per cent saying their living costs had increased, it’s a two to one ratio,” Ro Teimumu said.
She said she also found the differences between the Central and Western divisions baffling. Ro Teimumu said any such survey should also take into account the Turnover and Environmental Tax introduced by Government last year.
“I say this because if you are going to ask about the living costs of our people, the cumulative impact of these two new taxes should also be taken into account.”
An electronic mail (email) sent to FijiFirst general secretary and Attorney-General Aiyaz Sayed-Khaiyum on Wednesday requesting for a comment on the poll remained unanswered when this edition went to press yesterday.
