Minister of Finance Ibrahim Ameer has stated that the state debt increased after the government provided financial assistance to businesses affected by the COVID-19 pandemic and that the only solution is to increase taxes.
Speaking at the Parliamentary Committee of the Whole House, Minister Ameer highlighted the efforts made by the government to overcome the COVID-19 pandemic which had reduced the negative impact on businesses and the economy. He, however, said the government had to bear the cost, even while the state revenue decreased, of providing debt moratorium, as well as giving out loans to small and medium enterprises (SME), large companies, resorts, and individuals.
Furthermore, Minister Ameer highlighted the gross domestic growth (GDP) contracted by 33% in 2020 but bounced back by 41.6% in 2021. He, however, said that the government is now facing challenges in receiving financial assistance and needs to do whatever is necessary to increase revenue.
The government has proposed an amendment bill to increase taxes in 2023. The amendment bill proposes to increase the Goods and Services Tax (GST) from 6% to 8% and Tourism Goods and Services Tax (TGST) from 12% to 16% in an effort to increase state revenue.