The price of goods and services which are not VAT exempt under the current policy structure will increase by 2.5% from the 1st of January next year after the government announced that VAT will increase from 12.5% to 15%.
The VAT exempt items under the current policy include the selected basic food items and pharmaceutical products.
Acting Finance Minister Aiyaz Sayed-Khaiyum made the announcement during the 2011 National Budget address in the last hour, where he has also announced targeted assistance to the needy in society and at the same time has announced a number of capital projects through increased capital expenditure.
Sayed-Khaiyum said the VAT increase is necessary to meet government’s debt repayments but at the same time he said other measures are in place to cushion the blow on the people.
Looking at other price increases:
There will be increase in fiscal duty from 15% to 32% for all fresh and chilled vegetables and fruit juices.
In addition to the duty, a 10% import excise tax has been imposed for fresh and chilled vegetables.
The price of cigarettes, tobacco and alcohol will also increase as fiscal duty has been increased by 3%.
In addition to this, local excise tax rates have also increased for cigarettes and alcohol by another 3%.
New and increased excise tax rates have been announced for beer, spirit, and wine.
We will get you the new prices as they come to hand.
Prices for imported snacks and confectionaries will also go up after the imposition of a 15% import excise tax while import excise tax has been increased from 10% to 15% for water, including natural or artificial mineral water.
A 15% import excise tax has also been imposed on tube lights and bulbs.
Fiscal duty will also be increased from 5% to 32% for mops while duty for used or reconditioned heavy machinery will be reduced from 32% to 15%.
There is also a reduction in duty from 32% to 15% for new passenger motor vehicles not exceeding 2500cc and duty reduction from 32% to 5% for smart phones which are high end mobile phones.
The importation of non-biodegradable plastics will be banned and local manufacturers of non-biodegradable plastics will be given 6 months to adjust production.
The government has allocated $7.5 million to ensure that the $30 Food Voucher Program which started this year under the Ministry of Social Welfare continues.
23,000 people benefitted through the programme this year.
Sayed-Khaiyum said those people under the Poverty Alleviation Programme will continue to receive aid with an additional allocation of $3.6 million in the 2011 National Budget for 10,000 new food voucher recipients.
These new recipients will include the elderly over 70 years old, pregnant women who have no other source of help and disadvantaged families.
In education, the bus fare assistance for students will continue with an allocation of $12 million.
Also, $18.3 million is allocated for tuition fees and text book assistance for next year.
The government has stressed the importance of primary health care in the country where grass root programs will be revitalized and implemented.
$1.7 million has been allocated to construct Health Centres in Nayavu, Nasavu, Qamea and Kashmir in Lautoka.
Three mortuaries will be constructed next year in Balevuto, Mokani and Tukavesi and all 19 sub-divisional health centres will be provided ultra-sound and x-ray facilities.
The CWM Hospital in Suva is currently undergoing a major facelift.
Sayed-Khaiyum revealed that government has allocated $2 million for the purchase of a full body scanner called the “Magnetic Resonance Imaging” machine or (MRI), as well as a CAT scanner.
He added that it used to be past practice where people needing urgent scans would have to travel abroad however, this will be a thing of the past, adding that Fiji will also become a regional hub as other Pacific islanders will be coming to Fiji for treatment as well.
CAT scanners have also been installed in the Lautoka and Labasa hospitals.
The Water Authority of Fiji has been allocated $77 million for the completion of various capital projects next year.
This includes the upgrading of water and sewerage supply between Suva/Nausori, Nadi/Lautoka, Sigatoka and in Labasa so there are high hopes that these works will improve water supply in the country.
A total of $11.4 million has been set aside by government for the maintenance and upgrade of roads around Viti Levu.
In the National Budget address this morning, Acting Finance Minister Aiyaz Sayed-Khaiyum said that this money will be used for the Suva-Nausori corridor, as well as the Ratu Dovi Road where four lanes are currently being done up to the Laqere Bridge.
He added that the works are currently underway and will continue next year.
Government has now taken an active role to ensure the viability of the sugar industry.
Acting Finance Minster Aiyaz Sayed-Khaiyum said government has been approached by FSC’s creditors to settle borrowing that was guaranteed by the government.
Sayed-Khaiyum said government is committed to salvaging the sugar industry as more than 200,000 people or 20% of the country’s population depends on it for their livelihood.
A total of $123 million has been allocated to support the sugar industry in 2011.
$110 million has been provided to the Fiji Sugar Corporation, $6 million has been allocated for cane replanting next year while $1 million has been given for quality cane payment.
$5 million has been allocated to the South Pacific Fertilizers Company while another $1.5 million will be given to the Committee on Better Utilization of Land.
Government has allocated $4.5 million in the next year’s budget to construct a new remand cell at Korovou Prison.
Sayed-Khaiyum said this will address the overcrowding issue in our remand cells.
FICAC has been allocated $7.9 million.
The Fiji Police Force has been allocated $76.95 million and it has been confirmed that through the government’s vehicle leasing programme, the force will have its full complement of vehicles next year.
Police Commissioner Brigadier General Iowane Naivalurua refused to make any comments on the Police budget.
The military budget for 2011 is $108 million compared to the revised military budget estimate of $100 million this year.
Acting Finance Minister Aiyaz Sayed-Khaiyum has clarified that the increase in allocation to the RFMF was for the investment towards new technology.
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On to rural development, the government has allocated $3.7 million to construct a jetty in Rabi while the construction of jetties in Kadavu and Yasawa will continue next year.
Sayed-Khaiyum stressed that $2.8 million will be utilized under the rural electrification projects to provide electricity to people in Seaqaqa, Dreketi, Ra and Nadroga.
Another $3.5 million has been allocated in next year’s budget to construct and upgrade rural roads.
This includes roads in Buca Bay, Serea and Moto.
Government has also allocated $2 million to the Department of National Roads for the purchase of plants and machinery.
The budget for the Judiciary next year has been increased by $5 million from $11 million to $16 million.
Acting Finance Minister Aiyaz Sayed-Khaiyum said this will also see the appointment of new judges and magistrates in the country.
The office of the Director of Public Prosecutions has also received an increased budget.
The allocation has increased from $6 million to $8 million.
The annual grant to the Legal Aid Commission has also increased from $0.6 to $0.8 million.
Dairy farmers will now be able to run the operational aspects of the business after government today announced that the restructure of Rewa Dairy will see the company’s roles separated.
Acting Minister Aiyaz Sayed-Khaiyum said that the restructure which will be completed in two weeks, sees the separation of the company’s commercial functions from its corporate functions.
This will see a new company established and called the Fiji Dairy Company Limited which will be the commercial side of the company while the other one would be called Fiji Dairy Co-Operative Company and will be administered by the dairy farmers.
Sayed-Khaiyum also revealed that $2 million has been set aside to assist the farmers for the set up of the Rewa Co-Op.
Meanwhile, the commercial branch will be government owned and then later become privately owned.
An extra $80 million in revenue is expected to be generated from the increase in VAT from 12.5% to 15%.
FIRCA CEO Jitoko Tikolevu said this is the estimated amount expected to be raked in by the 2.5% increase.
Fiji Chamber of Commerce president Peter Masey said it is time to bite the bullet and make the hard decision to increase VAT to ensure government finances are stabilized.
However, Consumer Council of Fiji CEO Premila Kumar said it will be a challenging year for consumers and they need to curb their spending.
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Fiji Manufacturers Association and Flour Mills of Fiji chairman Hari Punja said the incentives for exporters and manufacturers will help bring back confidence and definitely improve the economy overall.
And with government significantly reducing duty on smart mobile phones, Digicel Fiji CEO David Butler said this will ensure more accessibility and increase mobile penetration.
Solicitor General and chairman of the Legal Aid Commission Christopher Pryde said the increased allocation to the commission will allow them to hire more lawyers.
Fiji Fish Limited managing director Graham Southwick said they are excited with the incentives announced in relation to the fishing industry which will help create more employment.
The Fiji Hotel and Tourism Association has welcomed the Government’s intention to keep helping the tourism industry.
President Dixon Seeto added the establishment of the Casino Industry is a good move and it will surely bring in more money for the Fijian economy.
A total of $23.5 million has been given to Tourism Fiji in the 2011 National Budget.
Fiji Audio Visual Commission chief executive officer Florence Swamy said a significant announcement has been made in relation to the Audio Visual Commission as smaller film producers will now be able to access the film rebate as the minimum spending requirement will be $50,000.
Education Minister Filipe Bole said their zoning of schools and free transportation programme will continue next year adding that they will be looking at distributing free text books to secondary schools from next year.
Minister for Women Dr Jiko Luveni said the provision in the budget for an additional $3.6 million for 10,000 more recipients will help them provide more for the vulnerable in society.
Health Minister Dr Neil Sharma has highlighted a number of improvements in sub-divisional and divisional hospitals around the country.
According to Dr Sharma, their priority now is to install new equipment in major hospitals around the country so that people do not have to travel Suva for health services.
The government also announced that the fuel concessions to the Bus Industry will be reduced next year from 18 cents per liter to 15 cents per liter and Fiji Bus Operators Association acting president Virendra Kewal said they will be making a comment after going through the budget.
With the increase in fiscal duty from 15% to 32% for all imported fresh and chilled vegetables and fruit juices and the additional 10% import excise tax imposed for fresh and chilled vegetables, Agriculture Minister Joketani Cokanasiga said this is to encourage local farmers to grow more.
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The government has significantly increased capital expenditure next year from more than $320 million this year to $525.5 million next year.
This will see more capital projects including new or improved infrastructure and facilities for the people.
Story by: Vijay Narayan
