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The Fiji Hotel and Tourism Association says the tourism industry did not propose, endorse, or broadly agree to the Government’s new five percent Tourism Services Tax announced in the 2026–2027 National Budget.

The tax will be used to help support Fiji Airways, but FHTA Chief Executive Officer Fantasha Lockington says the majority of the industry’s operators were not consulted before the decision was made.

She says while a small number of individuals may have expressed support during discussions, they do not represent the wider tourism sector.

Lockington says Fiji Airways plays a vital role in the country’s connectivity, visitor arrivals, trade and employment, but argues that supporting the national carrier should be funded through a national fiscal response rather than a levy imposed on one industry.

She says the tourism sector is still recovering from the impacts of COVID-19 while also dealing with rising wage costs, labour shortages, infrastructure pressures and increasing compliance costs.

FHTA says the tax would apply regardless of whether a business is making a profit, ignoring factors such as operating margins, debt levels, seasonal fluctuations and existing forward contracts.

The association also disputes suggestions that the industry will absorb the cost, saying feedback from members indicates the majority, if not all, operators will pass the five percent tax on to customers because absorbing it is not commercially sustainable.

FHTA warns that when combined with the existing 12.5 percent VAT, the new levy would create a total tax burden of 17.5 percent on affected tourism services, before Fiji’s departure tax is added.

It says the additional cost risks reducing Fiji’s competitiveness against other tourism destinations.