A broader national mechanism would be more equitable than a tax concentrated on tourism operators, says Fiji Hotel and Tourism Association (FHTA) chief executive officer Fantasha Lockington.
Presenting the 2026-2027 National Budget, Minister of Finance Esrom Immanuel announced that the tourism industry had agreed to support a temporary 5 per cent Tourism Services Tax on hotels, tour and cruise operators with annual turnover exceeding $2million.
The tax will apply for 12 months from September 1, 2026, with all revenue ring-fenced exclusively for Fiji Airways.
Ms Lockington warned that by adding a 5 per cent charge to the current 12.5 per cent VAT would place a 17.5 per cent tax burden on affected tourism services before Fiji’s existing $200 departure tax is considered, undermining Fiji’s competitiveness against other destinations.
“The very argument that was being used to pressure rate reviews and apply special packaging to address low seasons,” she said.
“The association has submitted that if Government’s objective is to raise revenue quickly for a national purpose, a broader national mechanism would be more equitable than a tax concentrated on tourism operators.”
Ms Lockington said the association was insisting on minimum safeguards if Government proceeds with the 5 per cent turnover tax despite industry opposition.
The minimum safeguards include:
l Excluding pre-existing contracted, deposited and paid bookings;
l Ensuring the tax does not apply retrospectively;
l Applying VAT-style input/output treatment to avoid cascading costs; and
l Requiring the tax to be separately identified and administratively clear.
The association is also calling for a legislated sunset clause of no longer than 12 months, with receipts ring-fenced, independently audited and publicly reported and service tax payers given the opportunity to establish a special purpose.
“Vehicle entity for the tax contributed to be converted to equity in Fiji Airways.
“Service tax in tourism is a levy imposed on the turnover or charges of prescribed tourism-related services, collected from consumers but remitted by service providers.
“Tourism operators cannot be asked to provide a one-way transfer without clarity, accountability and a fair mechanism.”
Ms Lockington added that the support for Fiji Airways must be national, transparent, temporary, conditional and fair.
“The tourism industry has not agreed otherwise.”
