FHTA warns tourism tax rollout risks destination reputation

The Fiji Hotel and Tourism Association (FHTA) says confusion and backlash across Fiji’s major tourism source markets could have been avoided if the Government had listened to industry concerns raised months before the Tourism Services Tax (TST) was gazetted.

FHTA chief executive officer Fantasha Lockington said the association raised concerns immediately after the five per cent levy was announced, particularly because there had been no meaningful consultation with the industry.

The association proposed alternative, less disruptive ways of supporting Fiji Airways rather than imposing a broad tax across the tourism supply chain.

“We tried to make this work from day one, and we were ignored at every turn,” Ms Lockington said.

She said FHTA had specifically requested that holidays already booked and paid for be exempt from the new tax, similar to their treatment under the previous Service Turnover Tax.

The association also sought clarification on the tax’s sunset clause.

However, Ms Lockington said neither request was included in the final Gazette and no explanation was provided.

FHTA also called for at least four weeks between the release of the Fiji Revenue and Customs Service’s Standard Interpretation Guidelines and the implementation of the tax.

She said this was necessary because the TST had a significantly narrower scope than the Service Turnover Tax it replaces.

However, the guidelines were only finalised yesterday, leaving the industry 10 days before the tax takes effect on September 1.

“We handed government a clear, specific warning of exactly how complicated this was going to be to administer,” Ms Lockington said.

“That warning was not heard, or it was heard and dismissed. Either way, the result is the mess our travel partners are now scrambling to clean up, with days rather than weeks to do it.”

Source markets raise concerns

Concerns have also emerged in Fiji’s key tourism markets.

The Australian Travel Industry Association has described the retrospective application of the tax to existing bookings as an “absolute no-go” and accused Fiji of failing to understand how the international travel booking system operates.

Travel agents handling multi-resort itineraries have reported difficulties, including the lack of a consistent method for collecting the tax.

Some agents are being forced to re-invoice wholesalers and clients and reconcile bookings that were paid and settled months ago.

New Zealand travel agents raised similar concerns during Fiji roadshow events in Christchurch and Auckland this week.

Ms Lockington said the uncertainty was putting Fiji’s reputation as a reliable tourism destination at risk.

“Tourism Fiji and this industry have spent years, and a great deal of money, building Fiji's name as a credible, well-run destination in markets with no shortage of alternatives,” she said.

“That reputation is being damaged this week, not because of the tax itself, but because government would not listen when we told them exactly how to avoid this outcome.”

With the guidelines only finalised this week, travel agents, wholesalers and tour operators have just over a week to make changes to booking systems, invoicing procedures and customer communications before the TST comes into effect.

Fiji Airways guarantee

Ms Lockington said the tax also needed to be considered in the broader context of Fiji Airways’ financial position.

Parliament approved a further $200 million Government guarantee for Fiji Airways’ borrowing on August 17, bringing the Government’s total guaranteed exposure to the airline’s debt to $1.33 billion, equivalent to about 9.5 per cent of GDP.

“Our industry is not against Fiji investing in its own aviation sector. What we needed was consultation, time and clarity, and we asked for all three, repeatedly, well before this became a crisis,” Ms Lockington said.

“Government had every opportunity to get this right. It chose not to take it.”