Maharaj Urges Government to Cut VAT, Warns of Economic Stagnation

Opposition MP Alvick Maharaj has called on the coalition government to urgently reduce the Value Added Tax (VAT), warning that the current 15% rate is unsustainable and is crippling household budgets while stifling economic growth.

In a strong statement issued to Duavata News, Maharaj said that while VAT is a key source of government revenue, its current application has contributed to soaring costs of living and declining consumer spending power.

“Government needs to seriously consider reducing VAT back to a sustainable level,” he said. “For the past two years, VAT collections have been misused to fund skyrocketing operating expenses, while the debt level continues to rise. Even with higher VAT revenue, borrowing has not stopped, and our economic fundamentals are deteriorating.”

Maharaj pointed out that the 2023 decision to raise VAT from 9% to 15% has had a detrimental impact on ordinary Fijians. “The average family is struggling. If a household spends $500 on groceries, $75 of that goes straight to VAT. That is a huge burden for everyday people,” he said.

He argued that economic growth relies not only on government revenue, but also on the spending capacity of the public. “The government got it wrong. Instead of enabling growth, they restricted it. Boosting spending power will energize small and medium enterprises, stimulate cash flow, and increase overall productivity in the economy.”

Maharaj suggested that the government could offset reduced VAT revenue by cutting operational costs. “We need policies that are people-focused. It’s time to stop overburdening taxpayers and start managing public finances more responsibly.”

He warned that failure to act could lead to long-term economic decline. “The signs are already there—our economy is slowing. If we don’t correct course now, we may reach a point of no return.”