Tax ‘giveaways’ cost Government billions

TAX “giveaways” in the past 10 years have deprived Government of $3-4 billion in revenue, the Fiscal Review Committee stated in a report released on Thursday.

The committee said for many years the Government did not collect the money to pay for the services it provided.

“Tax ‘giveaways’ in the form of VAT, personal income tax and corporate tax reductions in the past decade have deprived Government of perhaps $3-4 billion in revenue that Fiji could not afford to lose,” states the committee.

“Much of what Government has spent has been poorly directed. Education funding (specifically TELS), Walesi, some sugar industry support and spending on roads are examples.

“A lack of funds and poor spending priorities means that much work has been left undone.

“Fiji health spending is critically under-funded compared with its peers. Without systematic maintenance, government assets have lost value and now need replacement.

“A lack of investment in water and sewerage is now having an impact on thousands of households daily.”

The committee noted the World Bank and International Monetary Fund have both recently recommended that tax rises and spending cuts were needed to reduce government debt and leave the Government in a better fiscal position.

“Our views are similar, but we believe that the spending cuts cannot be as drastic and some of the additional tax revenue to be raised is needed urgently for investment in health and infrastructure. In our view, without the additional investment required, economic growth itself may be threatened.

“We, therefore, see little choice but to slow down the rate of debt-to-GDP reduction which they have advised in favour of the additional spending that is required, with the intent that better rates of economic growth may improve government’s fiscal position.”