A water bottling company has described the Water Resource Tax (WRT) as a “pernicious tax” that needs to be taken out because it is limiting the growth potential of the industry.
“Last year we paid two and a half times more water tax than we did in income tax,” said Warwick Pleass, founder and managing director of Pleass Global Ltd, bottler of the AquaSafe water brand.
“So it’s a pernicious tax. It’s not a fair tax as far as I’m concerned. It’s limiting development in our industry, it’s certainly limiting exports and if the Government was going to review it, then that will be one thing I’ll suggest — get rid of that and make us pay income tax.”
Water bottlers had come under public scrutiny recently after the Government gave the industry a seven-year tax holiday on corporate income tax in its 2023-2024 budget.
The Government also increased water resource tax (WRT) from 18 cents per litre to 19.5 cents a litre for companies extracting more than 10 million litres of water every month.
FIJI Water is the only company that fits into that category and has been paying out tens of millions of dollars in WRT annually since the introduction of the tax in 2009 by the then Voreqe Bainimarama-led military government.
However, smaller water bottling companies had also been thrown into the situation with a WRT that charges significantly less — one cent per litre for volumes below 10 million per month — but which, according to Mr Pleass, still translates to a huge cost burden for them.
“Typically around the world, governments don’t tax water because it’s a renewable resource. Like air, it’s coming and going and recycling,” he said.
“To me, we should be contributing to economic development through income tax and VAT and all the other taxes that everyone pays.
“The water tax came about because the (military) government needed a way of getting income from one particular company. But the government admitted to use smaller bottlers that ‘we have to make a tax for everybody, otherwise it looks like we’re only chasing one company’.
“Everyone knows that and they have admitted that — that it was always a tax for one company. Now that company is paying its income tax too. I’m not privy to what happens in negotiations with other companies and Government, all I know is what I said to the Government and to the tax authority is that this tax was never really my tax to pay.
“It was never designed for me. I just got caught in it. As did the other smaller bottlers. So we feel aggrieved. This was never our tax to pay, it was always a tax for someone else and we kind of got caught in it,” Mr Pleass said.
He said despite the seven-year tax holiday, they were still saddled with the hefty WRT, which makes little sense.
“It’s a material amount of money on a product that we have to make (in) millions a day and make half a cent profit on if we’re lucky. Water bottling is about huge volumes and low margins. It sounds like one cent doesn’t sound like much but it’s a huge amount and it’s the difference between me selling water in the US or not.
“Or Russia or England or wherever, because that extra (cent) is an extra cost per litre and some customers just don’t want it because it’s too expensive.
“So, the water tax as it stands now is stopping exports. We’re still successful, we’re still exporting and we’re growing our exports, but we could sell more than we do now if the water tax wasn’t there,” Mr Pleass said.
Pleass Global Ltd is listed on the South Pacific Stock Exchange and is owned by local investors with Fiji National Provident Fund, FHL Trustees, J Santa Ram and FijiCare Insurance on its list of top 20 shareholders.
