Prime Minister Sitiveni Rabuka, the man who introduced value added tax into the country in 1992, says the proposed 15 per cent VAT on all items “is too much.”
Although a decision is yet to be made on the recommendation which was made by the World Bank, Mr Rabuka said in an interview in Labasa on Wednesday night that he would need to see the impacts of the various options before making a firm decision.
“We are considering a few options. I started VAT and it came at a flat rate and nothing was zero rated,” the PM said.
“When I introduced VAT in my last term, everything had VAT included — every item traded in Fiji.
“It was (Mahendra) Chaudhry’s government that took away the VAT on basic food items. Now what happens is that reduced money comes to Government if you have zero rate on food items.
“So it’s the importers of zero-rated food items who make a lot of money because they increase their sale.”
Mr Rabuka also said Fijians also needed to consider the financial and health benefits of planting and consuming healthy locally grown food, which could reduce the impact on their pockets and help reduce non-communicable diseases.
“Most food imported are engineered so they have many things added to them to last while on shelves and these things are the guilty elements in NCDs.
“All these added preservatives in imported food cause obesity and high blood pressure which is bad for us.
“But if we get our natural food organically produced in our back yards instead of using bleached flour and grow your own rootcrops, we will save money and stay healthy.
“On the VAT, I have not made my decision as I will have to look at the figures and those proposing it will come to me and tell me what is the effect of keeping zero-rated items and the effect of flat rate on VAT.
“But I think 15 per cent is too high. We started at 12 per cent then dropped to nine but we will see.”
Many shoppers The Fiji Times spoke to said VAT should not be hiked, and instead Government should make the price of food cheaper for those on social welfare and increase its income by putting a stop to wasteful spending.
