Fiji tourism welcomes new tax system

The Fiji Islands Hotel and Tourism Association (FIHTA) has hailed government’s move to change the hotel turnover tax (HTT) to a service turnover tax (STT).

The STT will now cover all services and businesses that benefit from tourism.

It will include rental car operators; inbound tour operators; events management operators; recreation; entertainment and cinema operators; bars and nightclubs; bistros or coffee shops with an annual gross turnover of $1.5 million and above; restaurants with annual gross turnover of $1.5 million and above; all water sports, underwater activities, skydiving, hot-air balloon rides, river safaris, aircraft charter or hire including helicopters, with an annual gross turnover in excess of $300,000; and home stay operators.

FIHTA chief executive officer Michael Wong said the association had proposed this change because they believed an increase of HTT would have a negative effect on the whole industry.

“This change is a positive move where all services and business that benefit from the tourism industry will contribute to government revenue and potentially to future tourism marketing funds,” Mr Wong said in a statement.

He said it was also expected that the new STT would bring in $57 million in 2012.

“The association notes that in 2013, Air Pacific will receive three brand new Airbus A330 aircraft,” Mr Wong said.

“We would need to increase our marketing in 2013 to ensure that these aircrafts, which will operate the long-haul routes are filled. In the past three years the hotels have increased inventory by 20 per cent,” he said.

Mr Wong said there were also several, including the GPH project that would increase hotel inventory.

“The association notes that tourism is now the leading foreign exchange earner for the country with expected earnings this year in excess of $1 billion,” Mr Wong said.

“The industry will contribute over $37 million in hotel turnover tax this year to government revenue,” he said.

Mr Wong said the association also acknowledged continued support for Tourism Fiji through the marketing grant of $23.5 million and the operational grant of $3 million.

He said this $23.5 million spent by Tourism Fiji supplemented the $100 million that was spent by hoteliers, wholesalers, inbound tour operators and the airlines used to promote Fiji as a tourism destination.