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Govt for, parties against imposing airport tax plan on locals

Fathmath Shaahunaz
10 November 2016, MVT 16:38
President’s Office’s minister and chair of its Economic Council, Ahmed Zuhoor speaks at budget review committee meeting at the parliament. PHOTO: NISHAN ALI/MIHAARU
Fathmath Shaahunaz
10 November 2016, MVT 16:38

While the Maldives government is looking to impose an Airport Development Charge (ADC) of USD 25 on all passengers departing from the Maldives’ main airport including locals, members of ruling Progressive Party of Maldives (PPM) along with other political parties are opposing the proposal.

Speaking at the budget review committee meeting Thursday over the State Budget 2017 proposed to the parliament, chair of the President’s Office’s Economic Council, Minister Ahmed Zuhoor confirmed that the government intends to charge the ADC of USD 25 from Maldivian passengers departing from Ibrahim Nasir International Airport (INIA) along with foreigners. However, members of parliament will ultimately decide whether locals will be exempted from the tax or not.

“The airport charge will be taken to develop the airport. The expenses [for the development] is nearly one billion [US] Dollars. Hence, despite this huge cost, its benefits are also for the public,” he said.

Stating that from his perspective as the Economic Council’s chair he had intended to charge ADC from each and every departing passenger at INIA, Minister Zuhoor requested the parliament to make the final decision on whom ADC should be imposed or not.

Countering Zuhoor’s talk, PPM parliamentary group’s deputy leader and Vilufushi MP Riyaz Rasheed declared that the group opposes charging ADC from locals, which he stated was unnecessary.

“I believe this is something the government should consider. We do not accept this budget was compiled to take [the tax] from locals. It is not done, not even in other parts of the world.”

Representatives of main opposition Maldivian Democratic Party (MDP) and Jumhooree Party also opposed imposing the new tax on locals.

In response to the members’ stand, Minister Zuhoor pointed out the government’s plan to establish a Sovereign Development Fund with the revenue from ADC next year. The state budget proposes that no withdrawals be made from this fund within the first three years of its establishment.

Explaining that the main objectives of the Sovereign Development Fund is to increase revenue to the state and cover future pending loans, he said, “We all know that our debt is accumulating while we’re undertaking such a huge development plan. The fund is structured to further grow via investments made by the cash deposited in it.”

The minister added that the fund will be used to repay loans and facilitate investment in small businesses.

The proposed ADC of USD 25 is expected to bring in a revenue of MVR 565.8 million in 2017. According to the state budget, ADC is a separate free from the airport service charge of USD 25 already charged from foreigners and USD 12 from locals. Should ADC be approved by the parliament, it will increase the total tax charged from foreign passengers at INIA to USD 37.

Meanwhile, in the wake of public outcry and harsh criticism over the controversial tax proposal, PPM’s parliamentary group leader and budget review committee’s chair Ahmed Nihan had said in a tweet late Tuesday that the government’s intention is to charge ADC “only from tourists and foreigners”. However, he did not impart further details.

While the government is proposing an ADC of USD 25 from next year onwards, INIA’s previous operator, GMR Group of India, had also tried to impose the same tax of USD 25 which had been promptly halted by the Civil Court. The proposed charge had sparked much controversy among the public with the majority opposing its implementation as airport development had not been completed at the time it was proposed.

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