The World Bank, has advised Maldives to lower the tax brackets to those earning more than MVR 25,000 per month as income tax revenue is insufficient.
The World Bank today released its Public Expenditure Review (PER) report, which examines government spending.
Thus, the current income tax brackets are too high to generate enough revenue from the tax. The World Bank proposes to lower MVR 720,000 (MVR 60,000 per month) to MVR 300,000 (MVR 25,000 per month).
Also, in reflection with the state of the world economies at the time and Maldives’ debt being many places above productivity, Maldives needs to raise funds from within to cover government expenditure the report noted. The World Bank report noted that a large part of the country’s income depends on tourism, and the impact of a global economic shock on the country’s income is high.
Thus, the World Bank has proposed seven main measures to increase public revenue:
The report also recommends reducing government spending and strengthening debt management.
The report also recommended strengthening the Fiscal Accountability Act, limiting the amount of guarantees the government can provide and making details of the government’s debt more public. It also recommended an end to double pensions and equality in state salaries.
The World Bank has also recommended that the existing subsidies be made available to those in need and that the expenditure on Aasandha to be further managed.