Infrastructure Minister Jone Usamate said high tax rates in Fiji a few years ago led to the problem of the underground economy.
Usamate says that due to high taxes, locals hid their income.
His comments come as Liberal Social Democrat leader Viliame Gavoka questioned the government’s fiscal policies in parliament this morning.
Gavoka gave an example of the Stamp Duty Act of 1920, saying the country lost many revenue opportunities when the decision was made to repeal the law.
“Most of the time we do it blindly, and it’s inexcusable. Did we know that when the Honorable Minister (Aiyaz Sayed-Khaiyum) said that we would repeal the Stamp Duty Law, we would lose $80 million? Did we know? We do not have.”
In response, Usamate gave examples of what the government discovered when it was employment minister.
“We used to walk into stores and these businesses had two sets of books for wages. One they show to others, and the others they keep for themselves. This was happening at all levels.
Usamate adds that this is why the government cut taxes, which made people show their real books.
He also clarified that if the government introduced a special tax on resources as suggested by Gavoka, foreign companies would not invest in our country and there would be no new job opportunities for locals.