Fiji's budget analysed by opposition
"Sin" tax increases, infrastructure spending, tax breaks for firms hiring young people and hefty increases in salaries for doctors are some of the features of Fiji's budget presented last night.
Increases in so-called "sin" taxes, more money for hospitals and roads, tax breaks for firms hiring young people and hefty increases in salaries for doctors.
These are some of the features of Fiji's budget presented last night.
It's the first budget since the country was hit by the devastating Cyclone Winston which the government says caused more than 1.35 billion US dollars worth of damage.
The opposition's finance spokesperson and economics professor Biman Prasad gave Sally Round his analysis of the budget.
BIMAN PRASAD: The focus on post cyclone building and recovery was supposed to be a major theme of the Budget. Unfortunately it is simply just about allocations. There are allocations for rebuilding school, roads and bridges in the affected areas. But the majority of the allocations remain outside of the focus of post cyclone recovery and really the budget continues with the trend in piling up more debt without prudent financial management and relook at some of the expenditure that was there in the 2016 budget.
SALLY ROUND: What is your analysis of that debt?
BP: The debt level is now almost close to 5 billion dollars and that means further burdens will continue to be borne by the people and businesses. We would have to look at ever increasing sources of revenue. And government over the last 3 or 4 years has run an expansionary budget. It has almost exhausted all its tricks on raising more revenue so I do not think that this budget actually meets the test of fiscal sustainability.
SR: The government has put a lot of money into the health system, 8.8 million allocated for doctors and nurses. Doctors get a huge increase in salary. This was necessary?
BP: The health situation in the country is appalling and one of the difficulties of course with the health system has been the overburdened overworked doctors. Any salary rise for the doctors is probably the right thing to do. But it is not going to solve the real problems within the delivery of health services in the country soon.
SR: The government has put efforts into getting young people into employment. People who are studying are able to go for apprenticeships and companies get a tax break on that. Do you think that is going to solve the problem of joblessness?
BP: That is a short term measure and some of it could be abused by the employers who might switch from more permanent employment to taking advantage of the many unemployed and getting into short term part time employment. I think what we have called for in the past is for government to re-introduce the apprenticeship scheme which ensured that we were able to develop the proper set of skills and also skills that would allow young people to find employment more easily. So this measure is a short tem measure, it is not a medium, long term measure. It is not going to solve the problem of unemployment in the near future.
SR: The government has recognised tourism is important obviously at this time after Cyclone Winston with tourism areas barely touched by the devastation and more money has gone into that. Has enough been done though to draw more investment into Fiji?
KH: Interestingly, the minister of finance did not talk about overall investment and the record of investment in the country at all. And I presume partly because on the investment front it is bad news. I mean we haven't been able to attract real quality job creating investment over the last two or three years. Tourism industry as you said quite rightly Sally is very important but in the last budget you know that the government actually increased the taxes. The sales turnover tax of 10 percent, there was environmental levy, health levy on top of the value added tax of nine percent. So the tourism industry is already reeling in high cost and tourism operators I know have been complaining about the rising cost of tourism products in Fiji and that could have an impact together with the impact of the cyclone itself. In the longterm, we don't want to become a very expensive destination. I haven't seen government marketing plan although they have increased their allocation. We want to see those marketing plans and a review of what government has done in terms of making sure that these increased expenditure for tourism marketing are going to produce results.
SR: The government is raising revenue on increased taxes on those bad things the alcohol the cigarettes the sugary drinks, surely that is a good move?
BP: We know New Zealand does the same I mean these are what we call sin taxes, but there is a limit to where you can go. I mean ultimately we all know that cigarette is bad for health, alcohol is bad for health but the fact of the matter is that the impact eventually you know the serious impact, the bad impact is on the lower income people. Yes I mean that is a worldwide trend. You know government find it very easy because elasticity of revenue from putting taxes on these what we call sin goods is very high and governments raise a lot of revenue. But there are other consequences of that as well. You know so instead of just looking at it as a revenue measure if government earmarked some of those revenue to education campaign to reduce alcohol and cigarette smoking then that would serve good purpose, but if there is not plan to do that then that is simply increasing taxes on these items every year, in and out, is not going to solve the problem.
SR: And just to finish how would you describe this budget just in a nutshell?
BP: It is a budget without vision, and you know may I say, it is small minded budget.
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