Business & Tourism
No money for the folks back home
Why a government plan to levy a three percent tax on migrant worker remittances has drawn concern among human rights advocates.
Jamal, a Bangladeshi domestic servant in Malé, earns US$500 a month. His basic salary is just US$200, the rest he earns through various odd jobs. Every month, at the Western Union money transfer office, Jamal pays US$6 for transaction fees.
Now, the government plans to levy a three percent tax on remittances. This means Jamal will lose another US$15.
“I work seven days a week, very long hours. This is terrible.”
Jamal is the primary breadwinner for his family of 12.
“Some of my friends only earn US$120. At this rate, they will only have US$20 for their families. With all these taxes and fees, how can they work here?”
The tax, among a host of new revenue raising measures proposed in the 2016 budget, is expected to raise MVR56 million. The funds will be earmarked for youth development, Economic Development Minister Mohamed Saeed has pledged.
The government estimates that some US$408 million is sent abroad as remittances each year. Finance Minister Abdulla Jihad told MPs this week that the tax will increase revenue and open up jobs for Maldives. “We can only bring out Maldivians to the job market, when the cost of foreign labour goes up,” he told the popular daily Haveeru.
But human rights campaigners say the tax will affect the most vulnerable of the Maldives’ expatriate labour force.
Some 135,000 foreigners are thought to work in the Maldives, of which some 40,000 are undocumented. A majority of them are unskilled labourers and only earn a few hundred dollars.
Criticising the policy as an added burden on an already marginalised community, former vice president of the Human Rights Commission of the Maldives (HRCM), Ahmed Tholal, said: “The money migrant workers get from doing all sorts of jobs – including some that may even be against the conventions we are party to – they are not keeping this money to indulge in luxuries…they are sending the money back to repay loans and to ensure their families don’t face poverty.
“When that money is taxed, its like starting income tax with the poorest in the country.
“Maldives is transit and destination point for human trafficking. But there’s been no comprehensive analysis or study to identify victims and provide them with redress. Taxing migrant workers without understanding or distinguishing between trafficking victims will re- victimize them again because in addition to the money that will be extorted from them, there will be a legalised system to extort money from them.”
The World Bank advocates for low remittance fees because it significantly helps migrant worker families. International remittances helped lower poverty considerably in countries Uganda, Bangladesh, and Ghana, studies have shown.
For many countries, money transfers from citizens working abroad are a lifeline for development, the World Bank said.
Worldwide, officially recorded international migrant remittances are expected to reach US$610 billion next year.
For Shahindha Ismail and Ibrahim Riza of rights groups, Maldivian Democracy Network and Transparency Maldives, the new policy is institutionalised discrimination.
“We are talking about a marginalised group that is already subject to low wages and other practices such as debt bondage. When they are deprived of basic rights, we are speaking of levying another tax?” Shahindha said.
Riza said: “It is very hard for migrant workers to get paid, salaries are often withheld for eight or nine months and they are asked to work longer hours than the labour laws allow. This is nothing but injustice. We, Transparency Maldives, believe we should not legalise discrimination.”
Another migrant worker rights advocate who wished to remain anonymous said expatriates who work in white collar jobs may be able to offset the cost by negotiating with their employers. “But unskilled labourers probably will not have that right.”
The Maldives has been placed back on the US State Department’s tier 2 watch list for human trafficking over lack of progress in the government’s anti-trafficking efforts.
The State Department’s 2015 Trafficking in Persons (TIP) report – regarded as a key global measure of anti-trafficking efforts – stated that the Maldivian government “does not fully comply with the minimum standards for the elimination of trafficking; however, it is making significant efforts to do so.”
At least three migrant workers were killed in violent attacks this year, and the government forced migrant workers to call off a demonstration over the violence, by threatening to deport them.
Additional reporting and writing by Zaheena Rasheed
Correction: November 17,2015
This article previously incorrectly said that the HRCM had declined to comment. The Maldives Independent had not contacted HRCM for a comment on this issue. We apologize for the mistake.