Minister of Finance Ibrahim Ameer has stated that the proposed increase to the Goods and Service Tax (GST) and Tourism Goods and Service Tax (TGST) was submitted to the parliament well after the IMF and World Bank had suggested to do so.

The Minister's statement came during today's parliament session, where Maduvvari Member of Parliament (MP) Adam Shareef quizzed him regarding the decision to increase taxes instead of reducing state expenses.

The Bill proposed by the government and sponsored by Ihavandhoo Member of Parliament Mohamed Shifau aims to increase GST to eight percent, while TGST will increase to 16 percent.

The Bill was accepted by the parliament last Thursday with the votes of 32 members out of 42 present. Eight members had voted against accepting the Bill. The Bill has since been forwarded to the Whole-House Committee for further review.

The government is pushing to implement the change at the beginning of 2023, in a bid to increase state revenue in the face of changing global economic situation.

During the parliament session today, MP Shareef highlighted that Speaker of Parliament Mohamed Nasheed has echoed advise from international parties on reducing state expenditure in light of recent economic developments. He had quizzed the minister on why the advise is being ignored, with the tax amounts being increased while the state expenditure remains the same.

In response, Minister Ameer highlighted that the state revenue has experienced a significant drop in light of the Covid-19 Pandemic, though as a "responsible government" they had continued developmental projects in the islands and did not let it negatively affect the salaries or the jobs of Civil Servants. The Minister noted that all of this was facilitated through loans and debt acquired by the government.

He added that work needs to be done to increase the state revenue in order to repay debts in a sustainable manner while also continuing projects that the citizens want. Minister Ameer stressed that in comparison to other countries, the rate of GST and TGST in the Maldives is rather low and that the proposed increase was in an effort to find new ways to increase the state revenue.

In this manner, the Minister revealed that the World Bank and the IMF both not only agree on increasing the taxation rates, but had advised on doing so long before the proposed amendment was submitted by the government.