President Mohamed Nasheed, speaking at a function to mark International Workers’ Day, has announces a number of tax reform measures to be introduced by the government aimed at reducing the prices of goods and services.

The President announced that the government would propose an amendment to import duties to the People’s Majlis in June to remove import duties on basic and everyday items in the market from 2012.

He said “the government expects a 10 to 15 percent reduction in prices after import duties are removed.”

He said, while 2011 budget estimated Rf2.3 billion from import duties, “the reforms to our financial system involve creating a tax mechanism, like in other civilized societies, instead of depending solely on import duties.”

The President revealed that, along with amendments to import duties, the government would also propose an amendment to the Parliament to increase Tourism Goods and Services Tax from 3.5 percent to 5 percent, and impose a Goods and Services Tax of 3 percent on general trade.

Among the reforms to taxation, the President also announced that the government intended to introduce an income tax on those who earn more than Rf30,000 per month.

“I have no doubt that these reforms will shift the government from its current sources of income to more sustainable income sources,” he added.

Reiterating the government’s pledge to reduce the prices of goods and services, the President said as a result of the monetary reforms introduced by the government, it has more instruments at its disposal to use to reduce prices.

Speaking to inaugurate the stakeholder workshop on labour market and industrial relations organized by the Ministry of Human Resources, Youth and Sports to mark Labour Day, the President announced the government’s intention to introduce a minimum wage this year.

Highlighting the need for a decent and fitting return on people’s labour in order for them to lead life with dignity, the President said:

“This government came to power with hopes, to give a decent and an honourable life for Maldivians,” he said.

In his address this morning, the President reiterated the government’s commitment to promote the rights of employees as well as employers.

He said the government’s policy was to “create an amicable environment for employees and employers by protecting the rights of employees and employers and establishing stronger labour relations frameworks.”

He added that the monetary reforms introduced by the government were also intended to restructure the labour market.

Furthermore, the President said history showed that many political leaders had been reluctant to bring about economic and monetary reforms their countries required.

“Most political leaders are disinclined to restructure monetary systems, change wage limits, and reform tax regimes because they are pressured to consider the needs of few powerful people.”

“But I assure you that the leader you [Maldivian people] have elected is not like that,” he said.

He said the government was determined to make people’s lives better and create opportunities that would give sustainable benefits to the people.

This is the first time International Workers’ Day was marked at official level in the country. The government earlier declared that International Labour Day, 1 May, will be a public holiday from this year onwards.