The Fiji Hotel and Tourism Association says the tourism industry did not propose, endorse or broadly agree to the Government's proposed 5 percent Tourism Services Tax or Service Turnover Tax announced in the 2026/2027 National Budget.
Association Chief Executive Officer Fantasha Lockington says any suggestion that the tourism industry supported the measure is misleading, stressing that while a few representatives may have expressed support during isolated discussions, they do not represent the wider industry.
She says the overwhelming majority of the Association members strongly oppose the tax in its current form and the lack of consultation before it was announced.
Lockington says while Fiji Airways is critical to the country's connectivity, tourism, trade, employment and national brand, support for the national carrier should come through a national fiscal response rather than being placed solely on the tourism sector.
She says tourism operators are already dealing with the COVID-era debt, rising wage costs, labour shortages and increasing compliance costs.
The Association says the proposed tax would apply regardless of whether businesses are making a profit and would ignore operating margins, debt levels, seasonal fluctuations and existing contractual obligations.
Lockington says operators cannot simply pass an additional five percent charge onto guests, travel agents or wholesalers for existing bookings, warning that doing so could lead to disputes, cancellations and damage Fiji's reputation as a tourism destination.
She says members have indicated they will pass the tax on to consumers because absorbing the additional cost is neither practical nor commercially sustainable.
The Association also warns that adding the new tax to the existing 12.5 percent VAT would result in a total tax burden of 17.5 percent on affected tourism services, before Fiji's $200 departure tax is taken into account.
The Association says this could reduce Fiji's competitiveness against other tourism destinations.
The Association says if the Government proceeds with the tax, it is calling for safeguards, including exempting existing contracted, deposited and fully paid bookings, ensuring the tax is not applied retrospectively, introducing a VAT-style input and output credit system to avoid cascading costs, and requiring the tax to be clearly identified.
The Association is also calling for a legislated sunset clause of no more than 12 months, with all revenue ring-fenced, independently audited and publicly reported.
It is further proposing that tourism service taxpayers be allowed to establish a Special Purpose Vehicle so their tax contributions can be converted into equity in Fiji Airways.
Lockington says support for Fiji Airways must be national, transparent, temporary, conditional and fair, and maintains that the tourism industry has not agreed to the proposed tax.
FHTA rejects claims tourism industry backed 5% Tourism Services Tax
