ps: the information in this article may not be accurate: please comment/correct the misinformation
Maldives, being in an economic crisis, people not making enough to fulfill their daily need / essential need, a time where the electricity and water is threatened to be disconnected with just a month of pending bill, the government introduces a new tax upon the humble citizens. - 'GST'GST: a term used to describe the extra charges that the government is leaching from the general public, with nothing returned to them. an extra cost to bear for the people when they cannot afford luxuries: not even the necessities after their daily coffee. A bother for the retailers and wholesalers in a time where every single one of them is the direct importer of every possible product. a burden for the importers when they cannot buy *USD readily or even open an *LC or send a *TT. a burden for the people selling USD to the local in the black market.
Outraged by this extra charges which goes to the government and only to the government, the people have complained, protested and what not to get the government to stop this ridiculous charge: what is this GST and what does it do: it does not help us in any way: just fill the pockets of the government vultures.
Let us take a look at the life before GST, a life before the last 50 years, a time when 50KG of rice is rumored to have been for 50 laaris, a time when you can get you plot as long and wide as you can throw a pebble. a time where you had to get visa to enter Male', and also a time when you had to pay taxes on everything you get/grow. back then tax evasion was to hide the total harvest or items bartered in a safe place where 'hangu beykalun' cannot spot during their inspection. the difference between now and then was that tax was only from goods, and in the form of goods, not currency.
I don't know when this tax was stopped or why or how, but it has been forgotten by most people except a few who i have spoken with.
basic facts about GST:
only 3.5% of the retail price: the amount consumer pays will go to the government:
ie: if the consumer price for an item is MVR 100.00, the retailer will charge MRF 3.50 from the consumer. the price the retailer got from the whole sale maybe MVR 50.00, for which he paid MVR 1.75 as GST. and the price that the wholesaler imported the item is MVR 20.00 and this price includes freight, insurance and import taxes.
here's what will happen:
WHOLESALER: pays to the government customs duty as tax, includes it int he wholesale rate, determine a rate which in this case is MVR 50.00.
he also pays to the government MVR 1.75 as GST which is the amount he has charged as GST from the retailer.
he also makes a hefty profit of MVR 30.00 which is 150% of the cost.
RETAILER: pays to the government MVR 1.75 from the MVR 3.50 he has charged from the retailer and keeps the MVR 1.75 he has paid to the wholesaler as this amount has already been paid (or will be paid) to the government by the wholesaler.
the retailer makes a profit of MVR 50.00 which is 100% of the cost.
CONSUMER: this guy: the general public, who paid the actual amount to be given to the government has paid 3.5% of the cost to the government and the total inflation of the price when sold to him was 400% of the actual cost.
there is another scenario, before GST: consumer tend not to take change from shops, avoid as much as possible. the lowest denominations of coin majorly rotated was MVR 1.00 and the coins below that were discarded as toys or even dirt. but the phenomenon after GST being introduces is pretty confusing. as the introduction GST increases the price on a pack of cigarettes by MVR 0.77 which is less than the average amount we discard as change at cafe'/restaurants and even at shops per day, unless of course paying by debit/credits cards. so i don't see any cause for turmoil/dissatisfaction due to GST. not to me at least. and i don't think that this has affected the large number of people who coffee all day long, paying GST to the coffee shops and definitely not to the crowd who visits neighboring countries every fortnight. with this I fail to see the people who were negatively (or positively) affected by this phenomenon called GST.
*USD - united state dollars
*LC - Letter of Credit
*TT - Telegraphic Transfer
