Government should consider expanding the list of zero-rated VAT (value added tax) items to keep its political promise of containing the inflation rate.
Business consultant Sailesh Naidu said this at the Fiscal Review Committee public consultation in Lautoka this week, where he also said, in a bid to increase consumer consumption, the State should also consider a standardised VAT rate between nine per cent and 15 per cent for all items, excluding zero rated items.
Mr Naidu said another option would be to consider reduction in the 15 per cent category to a lower rate.
“At the end of the day, Government should be content with the increase in duty and VAT collections based on consumer demands,” he said.
“Government could also consider expanding the list of zero-rated VAT items to keep its political promise of containing inflation rate.”
He said the State needed to set a platform to give small traders the opportunity to enter the market, encourage competition and reduce prices.
“Government should relax licensing impediments for importation of certain items which will provide more competition to well establish business outlets that have been monopolising the market because of licensing protection, transforming into huge price mark ups and profits.
“For example, import restrictions on motor vehicles for ordinary Fijian citizens should be reviewed so that ordinary citizens can also import cars for their family use and free cycle it in a couple of years to consider and upgrade.
“At the end of the day government’s interest is to collect more VAT and more duty.
“Customs duty is charged at variable rates across most of the imported items in the country.
“There are some businesses in Fiji who create companies offshore with dummy ownership.
“This contributes to the increased landing cost for imported items thus affecting the final selling price. A penal rate of tax should be imposed on such companies to discourage such activities.”
