The Fiji Tourism Action Group has defended the Government’s temporary five per cent Tourism Services Tax, saying the levy is essential to protect Fiji Airways’ international connectivity and the thousands of jobs supported by tourism. The measure has, however, drawn criticism from the hotel industry over concerns the financial burden is unfairly targeted.
SUVA, Fiji – The Fiji Tourism Action Group (TAG) has defended the Government’s decision to introduce a temporary five per cent Tourism Services Tax, arguing that the measure is necessary to protect Fiji’s international air connectivity and the thousands of jobs that depend on the tourism sector.
The levy, announced in the 2026-2027 National Budget by Finance Minister Esrom Immanuelwill apply to hotels and tour and cruise operators with an annual turnover of $2 million or more. It will take effect from September 1, 2026, for a period of 12 months and is expected to raise approximately $70 million. The revenue will be ring-fenced to support the operations of Fiji Airways as the airline grapples with elevated global aviation fuel costs.
The measure has generated strong opposition from the Fiji Hotel and Tourism Association (FHTA) and sections of the accommodation sector, which argue that the financial burden of supporting the national airline should be shared more broadly across the economy rather than being borne primarily by tourism businesses.
However, TAG chairman Damend Gounder said the proposal emerged from months of consultation between the Government and tourism industry stakeholders after the sharp escalation in aviation fuel prices triggered by conflict in the Middle East.
According to Gounder, tourism contributes an estimated 40 per cent of Fiji’s gross domestic product and supports around 120,000 direct and indirect jobs, making the protection of Fiji Airways’ international network a national economic priority.
“When Fiji Airways’ international connectivity came under threat earlier this year, TAG acted not to protect one company, but to protect the thousands of jobs and communities that depend on Fiji remaining open, accessible and competitive to the world,” he said.
Fuel crisis prompted industry discussions
TAG said Fiji Airways briefed industry representatives on the financial pressures caused by the rapid increase in aviation fuel prices following the escalation of tensions between Israel, the United States and Iran. According to the group, the airline warned that maintaining its existing international schedule was becoming increasingly difficult without financial support.
Gounder said Fiji Airways advised TAG that, like many airlines globally, it was considering measures such as fuel surcharges and possible capacity reductions if operating costs continued to rise. TAG argued that any significant reduction in flights would have far-reaching consequences for hotels, tour operators, transport providers, retailers and communities that rely on visitor spending.
TAG also noted that other airlines serving the region had already begun reducing capacity, highlighting the importance of preserving Fiji’s air links during a period of global uncertainty.
Recommendation followed consultation
According to TAG, a high-level meeting was held on June 1 involving the Minister for Finance, senior officials from the Ministry of Finance, the Deputy Prime Minister and Minister for Tourism and Civil Aviation, Fiji Airways, Tourism Fiji, representatives of the Fiji Hotel and Tourism Association and major tourism operators.
The meeting considered several options to support Fiji Airways, including redirecting departure tax revenue, government guarantees, direct financial assistance and a temporary Tourism Services Tax before recommendations were submitted to Government.
Gounder said while businesses may differ on the preferred funding model, it is important to recognize that the tourism levy formed part of a broader package developed collaboratively between Government, the airline and industry representatives.
Call for transparency
TAG has also called on Fiji Airways to provide regular public reporting on how the funds raised through the temporary levy are used.
Gounder said transparent reporting would help ensure accountability by showing how the revenue supports airline operations, protects international connectivity and delivers measurable benefits to Fiji’s tourism industry.
Fiji Airways has welcomed the Government’s support, saying the assistance will strengthen its ability to maintain and expand international seat capacity while the global aviation industry continues to face high fuel prices, supply chain disruptions and rising operating costs.