2011 National Budget announced

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.

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.

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