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Monday roundup: income tax, record budget and corruption probes

A roundup of the day’s top stories.



MDP MPs criticise threshold for income tax

Lawmakers from the ruling Maldivian Democratic Party on Monday criticised draft legislation proposed by the government to introduce a progressive income tax on January 1, 2020.

The threshold of MVR40,000 (US$2,594) a month was lower than the MVR60,000 pledged during the party’s Agenda 19 campaign for April’s parliamentary elections, several MDP MPs complained during preliminary debate on the bill, calling for changes during the committee stage before it is passed into law.

The proposed rate of eight percent for the lowest bracket of MVR40,000 to MVR60,000 was also higher than the 3.5 percent pledged during the campaign, MPs noted. According to the finance ministry, the tax base is expected to be about 6,000 people and the estimated annual revenue is MVR680 million.

Mickail Naseem, MP for Galolhu South, objected to exempting income from dividends issued to company shareholders. But his colleague ‘Andhun’ Hussain Shameem supported the exemption, contending that the tax would “bankrupt” businesses and noting that dividends are distributed after companies pay business profit tax.

MDP MPs backed an income tax as necessary to complete the taxation system and combat corruption and illicit enrichment.

National airline launches flights from Hanimaadhoo to Cochin

The national carrier Maldivian on Monday launched direct flights from the Hanimaadhoo airport in the northernmost atoll to Cochin in the southwestern Indian state of Kerala.

The maiden flight was due to depart at 5:40pm.

According to the state-owned Island Aviation Services, a return ticket from Hanimadhoo to Cochin will cost US$199, higher than the US$150 price for a return ticket from the capital Malé.

Maldivian airlines currently flies to destinations in Thailand, India, Bangladesh and China.

Vast majority of undocumented workers lack passport

Ninety percent of undocumented workers who have registered under the regularisation programme launched last month do not have their passports, according to the economic development ministry.

The lack of legal documents was the biggest challenge faced after registering 14,000 irregular migrants so far, Deputy Minister Mariyam Nazima told parliament’s national security and foreign affairs committee on Monday. The Bangladeshi embassy said it would take between three to six months to issue new passports, she added.

An estimated 63,000 foreign nationals work in the Maldives illegally out of a migrant worker population of 144,600, predominantly Bangladeshi and Indian men who work in the construction and tourism industries.

Last week, Indian police arrested a suspected Nepali human trafficker and rescued nine young Nepalis who were due to be sent to the Maldives.

According to an annual human trafficking report by the United States, many workers from South Asian countries are brought in by recruitment agents with the promise of resort jobs only to be left to fend for themselves after their passports are confiscated. Foreign workers are subjected to “practices indicative of forced labour, including fraudulent recruitment, confiscation of identity and travel documents, withholding or non-payment of wages, and debt bondage.”

Last year, the Maldives was downgraded on a US watchlist for human trafficking over the failure to meet minimum standards for elimination.

Record MVR40 billion budget prepared for 2020

The finance ministry is preparing to submit a record MVR40 billion (US$2.6 billion) budget for 2020, according to an updated medium term fiscal strategy document shared with parliament.

The finance ministry estimates the budget deficit in 2020 to be 6.5 percent of GDP. “The government expenditure is structured to reduce this deficit in the medium-term, to lead to a surplus primary balance in the year 2024,” it added.

“In this manner, budget for the year 2020 is estimated to be MVR 39.6 billion, of which total expenditure is estimated to be MVR 37.0 billion. Should the overall deficit to GDP be maintained at 6.5 percent, new programs and projects is estimated to receive a ‘fiscal space’ of MVR 5.5 billion.”

But the figure is likely to be smaller when the finalised budget is submitted to parliament on Thursday, a finance ministry official told the press on Monday.

New revenue measures to raise an estimated MVR2.5 billion include an income tax, leasing islands for resort development, changing foreign labour quota fees and work permit fees, and basing the airport service charge on ticket classes.

The record 2019 budget of MVR30.2 billion was increased by MVR1.7 billion in August through a supplementary budget approved by parliament.

At Monday’s sitting of parliament, lawmakers unanimously passed an MVR64 million budget for the Auditor General’s office for 2020 – up from MVR50 million this year – of which MVR43 million would be spent on salaries, allowances and other benefits for staff. The public finance law requires the audit office budget to be approved separately before the annual state budget.

Teenagers suspected of stealing chemicals to make bomb

Police have recovered chemicals stolen from a school laboratory by a group of teenagers who were suspected of planning to make an explosive device.

The chemicals were found in a search operation based on intelligence information, police informed the media on Sunday night. But none of the suspects, who were below of 15 years of age, has been arrested and the case is under investigation, police said.

High Court seeks probe of judges accused of bribery

The High Court has asked police to investigate allegations of bribery made by a local businessman over an appeal involving the termination of a resort development deal.

Mohamed Riyaz, majority shareholder of Biznas Maldives, told a parliamentary committee that he was approached by representatives of High Court judges. They demanded payments for the appellate court to rule in his favour in the dispute involving Hibalhidhoo island, he alleged. After the island was seized by the tourism ministry, the civil court ruled in favour of Biznas in December 2016 and ordered the government to hand back the island. But the state appealed at the High Court.

“Maldives High Court asked the police to conduct a complete investigation to find out who the alleged officials representing the judges were, what were their phone numbers and who were the judges that travelled under the tourism minister’s sponsorship,” the High Court said in a statement on Sunday. 

City councillor alleges corruption

The Malé City Council has been accused of awarding a project before the bidding process was completed.

Two members of the city council – including the chair of the bid committee – told Sun that construction of a small building in the capital’s eastern waterfront was found to have started when the bid quotations were sent to the committee. 

Councillor Mohamed Fazeen posted photos on social media of workers from Amin Construction inside the Adi park, which remain fenced off for redevelopment. According to Fazeen, the project was worth “about MVR 1.9 million” and three quotations were submitted to the committee. The two higher priced quotation were prepared in the same format, he claimed.

Mayor Shifa Mohamed could not be reached as she is presently out of the country. Deputy Mayor Shamau Shareef told the Maldives Independent that he could not comment before going through the documents.

President returns from Japan

President Ibrahim Mohamed Solih and First Lady Fazna Ahmed returned to the Maldives on Sunday night after an official visit to attend the enthronement ceremony of the new Emperor of Japan.

During the visit, the president held talks with with Japanese Prime Minister Shinzo Abe, the president of the Japan International Cooperation Agency (JICA) and the mayor of Odawara City, which is due to the host the 2020 Summer Olympics. The first couple also visited Japan’s Maritime Disaster Prevention Centre.

“Over the years, Japan has been an irreplaceable friend to the Maldives, providing immense amounts of aid, and investing in the development of the Maldives’ human resources, infrastructure and climate resilience,” the president’s office said.

“The Maldives owes much of its socio-economic progress to Japan, whose magnanimity was essential to helping the country achieve the milestone of graduating from Least Developed Countries (LDCs) status in 2011, to become a Middle-Income Countries (MICs).”