Continuous tax hikes will yield no benefit to the state if wasteful spending continues to rise: Zubair

Ahmed Zubair Adam, a board member of the National Boating Association of Maldives, has stated that despite successive tax hikes, the state will see no benefit if wasteful spending continues to rise.

Speaking during RaajjeTV’s "Dollar Debate" program, Zubair stated that the recent regulatory changes mandating the conversion of foreign currency earnings do not pose significant challenges for businesses such as safari vessels. Zubair noted that even if 40 percent of dollar earnings are converted, the remaining 60 percent is sufficient to cover the dollar-denominated salaries of staff working on these vessels.

Zubair further noted that payments for fuel required by cargo vessels, as well as goods purchased from the market, are also made in Maldivian Rufiyaa.

However, Zubair expressed concern that while the government is increasing the financial burden on citizens and businesses, there remains a lack of adequate port facilities for vessels importing goods from abroad. In this regard, he noted that some cargo vessels have been forced to remain in Sri Lanka for over three months, unable to offload their shipments.

Our primary concern is that despite the recent expansion, we still lack a functional harbor. We remain stranded without a proper docking area. Furthermore, the high speeds of passing speedboats are causing physical damage to our vessels. We urge the government to offset the tax increases by reducing their own expenditures. Many people we speak with report that cargo remains stuck and cannot be unloaded. Some shipments have been stranded in Sri Lanka for three to six months. There is a serious crisis at the port.

Ahmed Zubair Adam, Board Member of the National Boating Association of Maldives.

Zubair emphasized that while the government increases taxes, it is crucial to reduce wasteful state expenditure and prioritize infrastructure development. He further noted that the ongoing dollar crisis cannot be resolved unless salaries for employees in State-Owned Enterprises (SOEs) and those in political positions are reduced.

The value of the dollar is fundamentally driven by demand and supply. There is currently significant demand to meet the needs of the Maldivian people. However, the supply of dollars is being increased at a high cost. If supply is expanded without simultaneously addressing the demand side, the pressure on the dollar will only intensify. To alleviate this pressure, demand must be managed by reducing wasteful spending, specifically by streamlining state-owned enterprises and cutting the wage bill for political appointees.

Ahmed Zubair Adam, Board Member of the National Boating Association of Maldives.

To address the ongoing dollar shortage, President Dr. Mohamed Muizzu has ratified a law mandating tourism businesses to exchange 40 percent of their foreign currency earnings into local currency. The ratification of this law has drawn widespread public criticism toward the government. Many have also argued that the current economic downturn is a direct result of excessive and wasteful spending by the Muizzu administration.