Finance Minister Dr. Mohamed Shafeeq announced today that the government has decided to raise the Airport Development Tax (ADC) and Green Tax as a strategy to increase foreign currency revenue.
Finance Minister Dr. Mohamed Shafeeq announced today that the government has decided to raise the Airport Development Tax (ADC) and Green Tax as a strategy to increase foreign currency revenue. This move is aimed at addressing the substantial debts that the state must repay in the coming years, particularly in 2025 and 2026.
Speaking before the Parliament's Public Finance Committee about the Medium-Term Debt Strategy Statement, Dr. Shafeeq highlighted that the government faces a significant repayment of USD 100 million in 2025, with a total of USD 500 million in debt due that year. The following year, in 2026, the repayment will be even more challenging, with USD 500 million to be repaid at once, bringing the total debt repayment to USD 1 billion.
Dr. Shafeeq outlined plans to adjust revenue policies to manage these repayments without pushing the country toward bankruptcy. One such policy includes increasing the amount of dollars deposited into the Sovereign Development Fund.
"The government's goal is to continue generating revenue without overburdening citizens with taxes. There are no plans to raise GST, TGST, BPT, or withholding tax," Dr. Shafeeq emphasized.
As the government needs to service its foreign debts in dollars, it aims to boost revenue in foreign currencies.
Several measures have been proposed to achieve this:
- Revising the rates of airport development taxes and fees.
- Increasing duties on unhealthy products.
- Reviewing the GST administrative law and broadening the tax base.
- Adjusting green tax rates.
- Expanding the diversity of economic activities.
According to what is known, the changes to the Airport Development Tax are being made as an additional tax inapplicable for Maldivians traveling in economy class. Instead, this tax will be charged on first class, business class, and from charges collected from foreigners.
"The looming debts in 2026 must be paid in dollars. The government is working towards building the Buffer Sovereign Development Fund, which aligns with the public's interest," Dr. Shafeeq stated.
To discourage the use of harmful products, Dr. Shafeeq suggested increasing duties on certain items instead of outright banning imports, particularly those related to tobacco, such as vapes.
During the session, Maldivian Democratic Party (MDP) MP for Hulhumale' South Constituency, Dr. Ahmed Shamheed, questioned the minister about the estimated revenue increase from airport development fees, which is projected to rise from USD 145 million to USD 251 million. He also mentioned plans to double the green tax.
Dr. Shamheed inquired whether stakeholders in the tourism sector were consulted when making these estimates, given the emphasis on revenue generation from this sector.
In response, Dr. Shafeeg assured that the rates would be reviewed in consultation with relevant stakeholders. He also affirmed that the government would consider the perspectives of parliament members regarding these proposals.
In addition to boosting revenue for debt repayment and economic improvement, the government is also focused on reducing recurrent expenditure and reforming areas where state spending is deemed wasteful. Efforts are being made to cut costs in healthcare and fuel expenditures.
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