How the Environment Tax will affect you or me: Khaiyum’s duplicity

  • 4th December 2015
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In Budget 2016 Finance Minister Aiyaz Khaiyum imposed a 6% levy he called the Environment Tax (ET). He introduced it as a tax that “reinforces government’s commitment for all Fijians the right to a clean environment”.

He added that it would mostly apply to visitors who come for the luxury of our accommodations and the natural beauty and recreational opportunities in Fiji, and would willingly pay a small additional charge to support environmental protection programs. More importantly, he later told the Fiji media that the tax would not affect the ordinary local citizen.

But a look at exactly who/what the ET will apply to, exposes the lie to what he says. The truth is that the ET is just another revenue-raising measure for the cash-strapped FF government, disguised as an environment tax.

It is yet another attempt to fool the public and is a classic case of “he giveth with one hand and taketh away with the other”.

Some have questioned the accuracy of FLP’s claims that the Environment Tax applies to cinema tickets, meals, coffees, teas etc at coffee shops, local restaurants, clubs, bars and so on. Their skepticism is justified.

FLP also wants to know by what stretch of the imagination watching movies at cinema houses, having coffees, teas, meals at local restaurants, coffee shops, food halls etc fall under the environmental catch cry.

The truth is that under Khaiyum’s twisted sense of logic it does. On 2 December the Fiji Times ran an interview with FRCA CEO Jitoko Tikolevu who provided a full list of services that will be subject to the ET. Here is the list (excerpt from FT):
TIKOLEVU: The environmental levy rate is 6 per cent and is levied on the “turnover” of prescribed service providers. “Turnover” means the total charges for prescribed services billed to consumers. Environmental levy payable is computed by applying the tax rate to the fee for the prescribed service (exclusive of value added tax and service turnover tax).

TIMES: What services will be subject to the environmental levy?

TIKOLEVU: The environmental levy is charged or levied on prescribed services listed under the Schedule of the Environmental Levy Act. Prescribed services include the provision of:
* accommodation, refreshments and any other services in licensed hotels or tourist vessels;
* meals, beverages and any other services in licensed restaurants, bars, clubs, bistros and coffee shops with an annual gross sales of $1.25million or more;
* all services in licensed nightclubs;
* travel, tour and sightseeing services by inbound tour operators;
* all hired or rented car services with “LH” and “LR” licence number plates excluding taxis with “LT” licence number plates;
* all services including entry ticket fees provided within cinema premises;
* all water sports activities such as river safaris by water sports operators;
* accommodation and any other services by a registered homestay operators;
* recreational activities by recreational activity operators such as skydiving;
* live entertainment by personal participation of artistes or exhibition of products where entry fees is charged for events venue; and
* charter flight services by aircraft operators except flights for medical or natural disaster relief evacuation services.

Another point to note is that on ALL these activities Khaiyum is taxing us 3 times: they are all subject to 9%VAT plus 10% Service Turnover Tax and now the 6% ET – total tax on these food, transport and entertainment activities will be a whopping 25%.

If you are still not convinced – Khaiyum expects to raise $70m from the ET levy.

PS: For those who hadn’t realized it – tax on sugar-sweetened drinks has doubled from 5c a litre to 10c a litre. Disguised as a health tax this will bring an extra $5.4m to the State coffers.

Coke anyone?