Minister of Climate Change, Environment and Energy Thoriq Ibrahim has stated that reducing or eliminating the fee on plastic bags could impede the government's efforts to achieve its goals of phasing out plastic usage.
The proposed amendment bill to the Waste Management Act to reduce the fee on plastic bags from USD0.13 to USD0.03 was forwarded to the Parliament Committee of the Whole House for consideration in October. The committee has evaluated the amendment bill and discussed eliminating the fee on plastic bags or reducing it to USD0.03. They also discussed ways to solve the problem of businesses being double taxed. Most of the committee members were in favour of making plastic bags a tax-free (zero rate tax) item.
Additionally, the committee summoned officials from the environment ministry, the Ministry of Finance, and the Maldives Inland Revenue Authority (MIRA) to discuss the amendment bill. Speaking at the committee meeting, Minister Thoriq said that the issue of double taxation should be resolved but that he needed time to discuss the proposal to reduce the plastic bag fee within the ministry. Sharing his own opinion, the minister said the objective of the fee would be best achieved by maintaining the current price, highlighting that the funds received from environmental taxes are being used for crucial work related to the sector.
Minister Thoriq noted that the ministry is planning to use the funds received from the fee to commence important projects with the Environmental Protection Agency (EPA). As such, he said that it was easier to manage the work with a USD0.13 fee than a USD0.03 fee and that he needed more time to discuss the matter. Officials from the finance ministry also stated that reducing the plastic bag fee will impede the government's efforts to achieve its environmental policies, as it would lead to the increase in plastic usage.
Furthermore, Commissioner General of Taxation of MIRA Fathuhulla Jameel said changing the law or regulations would solve the issue of double taxation. The Waste Management Act currently exempts businesses from the fee if 50 or more bags are purchased wholesale. However, the fee is charged if bags are bought separately, which results in businesses having to pay the same USD0.13 fee per bag that customers are charged. He highlighted that businesses must remit the collected fees from businesses must be remitted to MIRA and that businesses do not retain any part of this fee. To address the issue of double taxation, he suggested a resolution by modifying the requirement to pay the plastic bag fee during the process of filing the Goods and Services Tax (GST) form.
The committee has granted the relevant authorities more time to discuss the amendment bill. The Parliament will continue its work regarding the bill in the first term of next year.