The tourism sector is facing significant challenges due to proposed tax increases, particularly with a focus on the green tax and rising airport taxes, which could lead to a potential decline in visitor arrivals. While the planned increment of the T-GST from 16% to 17% is set to take effect in June 2025, stakeholders are more concerned about the green tax increase, which is set to double from $6 to $12 starting January 2025. 

Notably, local guesthouses in inhabited islands with fewer than 50 rooms are also affected, as they will see the green tax rise from $3 to $6 per person.

Furthermore, international media outlets have recently portrayed the Maldives as transitioning from an expensive destination to a "super-expensive" one. This shift is attributed to the introduction of new airport departure taxes and development fees that significantly affect travelers. The new fees are striking: $50 for economy passengers (foreigners), $120 for business class (applying to both locals and foreigners), and $240 for first-class tickets (again, applicable to both locals and foreigners).

In terms of travel demographics, 90.2% of foreign travelers chose economy class in 2023, while an impressive 97.8% of local residents also opted for the same category. These statistics indicate that the majority of travelers are highly sensitive to price changes, making the proposed increases particularly concerning.

The industry has raised a number of apprehensions regarding these abrupt tax changes and additional fees. One key concern is the mandated foreign currency exchange, which could negatively impact revenue and profit margins. 

Industry representatives have also questioned the lack of adequate consultations with relevant stakeholders prior to the decision-making process, suggesting a need for a more collaborative approach to ensure sustainable tourism practices and awareness of the potential implications on the sector's growth. 

Moving forward, it is essential for authorities to listen to the industry’s concerns and engage with stakeholders to find a balance that promotes revenue generation without deterring visitors.

President Dr. Muizzu underscored the importance of the tourism sector as a vital contributor to the Maldives' economy, stating that the increased foreign currency collection would enable state-owned enterprises to secure USD at favorable bank rates. This move is intended to bolster the economy by facilitating better financial conditions for public services and enterprises.

However, Mr. Khaleel, the tourism industry advisor who was recently appointed to the economic council, has voiced serious concerns regarding the government's proposed foreign exchange policy. 

The apprehensions expressed by stakeholders, including members of the tourism sector, highlight a fundamental disconnect between government policy and the realities faced by businesses on the ground. 

Many businesses worry that the rigid foreign currency exchange framework may restrict their ability to operate effectively and could deter prospective tourists who are sensitive to costs.

Despite President Muizzu's assertion that the exchange policy will remain unchanged, industry representatives have urged for a reevaluation of this stance. They argue that a flexible and responsive exchange policy is essential, especially in light of rising fees and taxes that threaten the sector's stability and growth.

As the tourism sector continues to navigate these turbulent waters, it is crucial for the government to prioritize open dialogue with industry stakeholders. A collaborative approach can lead to strategies that foster a more sustainable tourism model while addressing the economic needs of both the government and businesses. If left unattended, the current trajectory of increased fees and inadequate consultation could risk diminishing the Maldives' appeal as a tourist destination, impacting revenues and livelihoods reliant on a healthy influx of visitors. 

While the government aims to stabilize the economy through increased taxation and currency policies, it must consider the long-term repercussions for the tourism industry and ensure that the measures taken are in alignment with the sector’s capacity to absorb these changes without jeopardizing its growth and sustainability.