A Spike in Prices and Wages

In its bid to increase the revenue base of its economy the Vanuatu Government has upped VAT from 12.5% to 15% on goods and services. The Government has sought a number of revenue generating options one of which is to introduce income and corporate tax to Vanuatu.

However after much pressure from Vanuatu’s private sector, the proposed option from the business community to increase the current VAT percentage has been adopted by the Government and comes into effect as of January 1 2018.

On December 29th of 2017 the newly appointed Minister for Internal Affairs, Hon. Andrew Napuat signed an instrument to increase the country’s minimum wage from 170VT per hour to 200VT per hour. This instrument has also taken effect since 1st of January 2018.

Minister Napuat stated that the increase is only necessary due to the increased cost of living that will have immediate effect on many employees and their families.

In his statement to Vanuatu’s local newspaper, Daily Post, Minister Napuat said that the cost of living is going up which is creating an imbalance for minimum wage earners who are struggling to make ends meet because the salary that they are paid is not enough to meet their expenses.

“The legal framework that determines how a minimum wage rate is reached covers four important areas; needs of the worker and his family, general level of wages in the country, cost of living and changes in society and social security benefits,” the minister said.

The minimum wage was increased last in 2012 with a now 17% increase effective in 2018.