Academic Professor Wadan Narsey has questioned why a seven-year tax holiday for existing and new water bottling companies was included in the 2023/2024 National Budget.
Speaking virtually during a post-budget forum organised by Dialogue Fiji on Wednesday, Prof Narsey said while he welcomed most of the provisions in the budget, there was scope for improvement in other areas.
“To exempt them from income tax for seven years, which will be applicable to existing and new businesses, raises the question – why are we suddenly picking on this industry?” he said.
“They have already been making very good profits for more than 20 years.”
The budget was not set in stone, he said, and urged Minister of Finance Professor Biman Prasad to consider amending some aspects of the document.
“There’s nothing to stop the Minister of Finance to say ‘OK, we have rethought about some of these things, and we would like to reduce our net deficit further’.
“We’d like to reduce the public debt further, to make it easier for people in the future and to bring about changes.
“Now, Government, says that they want to reduce further to 60 per cent by 2030. I suggest that will be for the next government to target because I think that this government should set a target for 2026 before the next election.
“The Coalition Government might want to think about that, because to me, it seemed very much as if they’ve gone easy in this first budget. Prof Narsey also spoke about the value added tax (VAT) system, where he acknowledged Government’s plan to protect low-income households and maintaining zerorated VAT on 22 essential items.
However, Prof Narsey said having a two-tier system, would bring in inefficiencies and loopholes for corrupt businesses.
“So not having a zero rating would have been a very, very good policy from two points of view. One, is it would actually remove all these inefficiencies that are there in a two-tier system.
“Secondly, the common sense is, and I think the Minister of Finance as a professor of economics can very well explain it to the people of Fiji, of course, zero rating it will help the low-income people, but the low-income people and the poorest people are only 30 per cent of the population.
“So why are we reducing it for everybody? We could actually charge everybody the VAT and take out of that wealth 30 to 40 per cent of the income to devote even more to social welfare, which the Government is currently doing, and still have some leftover.”
In response, Prof Prasad acknowledged the sentiments expressed by Prof Narsey but said the budget was thought out very carefully.
“We have laid the framework, that is how it’s going to go to Parliament,” he said.
“That is how it’s going to be passed.”
