The suggestion by the Fiji Institute of Accountants (FIA) that VAT be raised to 12.5 per cent to increase government’s revenue base has raised many eyebrows.
This is not the time to increase a tax which will penalisse the poor considering the widespread hardship and suffering inflicted by the COVID-19 crisis.
The focus right now should be on the suffering people – making their lives bearable and on containing the exponential increase in the spread of COVID-19.
Government’s own figures released in February 2021 show 115,000 workers have either been made redundant or were working on reduced hours – comprising one-third of the workforce. Some 40,000 workers were reportedly laid off from the tourism industry alone.
In March, the accelerated rate of the virus led to the imposition of border containment zones and lockdowns, particularly in the Central Division. Businesses and factories had to close down, and thousands more were deprived of their jobs and weekly pay checks.
The consequent social deprivation and suffering has been immense. Families have been crying out for food and other forms of assistance simply to survive.
The prevailing highly depressed socio-economic conditions caution against any fiscal measures which will fuel inflation and add to the problems of the ordinary people, as well as businesses.
Raising VAT will mean paying more for food and other basics, water, electricity, communication, medicines, transport etc.
How can one justify raising a tax that will cut across all sectors of the economy, increasing the cost of goods and services and pushing the already high cost of living to new heights?
Why take money away from the pockets of those who are already struggling to survive the economic and social onslaught of the pandemic on their lives?
A preferable option would be to remove the 9 per cent VAT imposed in 2016 on basic food items. This would provide appreciable relief in these difficult times.
The FIA suggests increasing VAT to 12.5 per cent and removing the 5 per cent Environment and Climate Adaptation Levy (ECAL) as a quid pro quo.
This is not a fair switch considering that the levy applies to tourism related businesses, coffee shops, restaurants etc with an annual turnover of $3m or more.
How many of our poor people and those disadvantaged by COVID-19 – some 75 per cent of the population – are likely to benefit from the removal of ECAL?
The unemployed have received very little assistance from government in terms of COVID-19 relief. The majority of the workers have been pushed to fend for themselves by withdrawing their pension savings from the FNPF.
Where is the money going?
Government has failed, despite repeated calls by opposition parties, to give an account of the hundreds of millions borrowed, or received in grants, from international financial institutions and the governments of our development partners.
These colossal sums were raised, reportedly, to mitigate the impact of the pandemic and the cyclones on the economy and the livelihoods of our people.
It is time for Economy Minister Sayed-Khaiyum to provide the answers to the people in whose name he has been borrowing and who will eventually be paying it off.
I believe much more needs to be spent on providing income support to the needy in a more tangible manner than the token $50 sporadic payments with half a dozen strings attached to it.
With the virtual closure of tourism for the time being, and its much depleted prospects in the medium term, attention must turn to agriculture in a big way.
Redeeming a promise
This brings me to the sugar industry which is currently embroiled in a harvest dispute because of the arbitrary reduction in the forecast price and delivery payment for the 2021 crop. Cane farmers want these to be significantly increased. They are not prepared to harvest at a loss.
Additionally, growers want the balance of the $25.5m (or $15 per tonne) owed to them by the government for their 2020 crop to be paid before they harvest. They have received only $70 so far out of the $85 guaranteed price.
Their protest has caused serious disruptions to the milling of cane, with a majority of them refusing to harvest until their demands are addressed. Lack of cane supply is forcing the Labasa and Lautoka Mills to crush intermittently at great loss to the farmers and the industry. FSC is not releasing weekly crush and sugar make figures as is the normal practice.
But we are informed that in three weeks, Labasa mill had crushed only 15,000 tonnes of cane making only 500 tonnes sugar at an abnormally high TCTS of 30 tonnes of cane to one tonne of sugar, instead of 10:1 – wasting 20 tonnes of cane, to make one tonne of sugar.
So far, the government has remained tight-lipped, not responding to written petitions sent to the Prime Minister on the issues in question.
Economy Minister Sayed-Khaiyum announced in his Budget address last year that the guaranteed price would be reduced to $70, but the Prime Minister stepped in to maintain it at $85 following strong protests by the National Farmers Union and opposition parties.
Still, the balance of $15 per tonne remains unallocated. Cane farmers wait to see whether adequate funds will be provided in the 2021/22 Budget to clear their outstanding dues and retain the guaranteed price at $85 per tonne for the 2021 crop.
This is a huge challenge for the Economy Minister. The ball is now in his court.
COVID-19 alarm
The situation in the country is simply scary.
The infection is spreading at an alarming rate with 5776 active cases and the daily tally of new cases hitting 636 on Tuesday with a total of 39 deaths.
It is alarming that people are dying even after receiving the first shot of the vaccine. People are dying in home isolation.
Infected families in isolation have complained that they are abandoned to fend for themselves without medical advice, medicines or follow up by the authorities.
Those who develop serious symptoms say they have received no response or feedback from 158 despite repeated panic calls for emergency assistance. People are just left to their fate, it seems.
It seems our health care facilities have collapsed. They are unable to cope with the current mounting number active cases. God knows what the situation will be in the next few days when we reach four-digit cases a day amid warnings that the crisis will get much worse.
Against this backdrop of spiraling cases, it is sheer madness to allow retail stores, restaurants, gyms etc to re-open “using safe protocols”. At the exponential rate the various is spreading, there appears to be no safe protocol.
Economic revival will not be possible in an environment fraught with heavy risks to people’s lives and health.
The absolute silence from government executives and the apparent lack of urgency shown by the Health authorities, indicate an attitude of nonchalance. They simply do not seem to care.
The nation appears to be heading for a calamity of unimaginable proportions. Yet government is paranoid with reviving a failed economy, as if people’s lives don’t matter!
- MAHENDRA P CHAUDHRY is the leader of the Fiji Labour Party and is also a former prime minister. The views expressed in this article are his and not of this newspaper.
