Overall an excellent budget at first glance but many details are not yet available. A better post after some time to absorb the details…
The main source of additional income is the
Turnover Tax, or STT. The tax rate will remain the same, but will now be extended to:
• Rental car operators
• In-bound tour operators
• Events management operators
• Recreation, entertainment and cinema operators
• Bars and night clubs
• 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
We will also increase the Departure Tax from $100 to $150.
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FLP has the following comments…
Budget 2012
The 2012 Budget will destabilize State finances and will most likely lead to increases in indirect taxes to offset the huge reductions in personal and corporate tax rates.
Corporate tax rates have been slashed from 28% to 20% while middle and high income workers should see big increases in their take home pay as tax rates plunge from 31%, to as low as 7% for those in the lower pay bracket.
This is likely to raise smiles all around but it should be realized that the move will have serious implications on Government revenue. As such, there will be a price to pay for the $53m giveaway to the people.
Already, the 15% Hotel Turnover Tax has been extended to include restaurants, cinema houses, rental cars and other tourist related activities. However, local residents will also be affected as major users of these services. A 2% a month levy has been imposed on outstanding balances on credit cards, increased tax on luxury cars, higher price for imported canned fish.
Other details on increased indirect taxes will only be revealed once the Budget supplementary is made available – it is still not out, according to informed sources.
The tax rebates may have been prompted by a need to stimulate consumer spending in the current depressed business environment but will most certainly fuel inflation.
The announcement on the FNPF Decree and pension cuts is outrageous. It was unilaterally imposed without any consideration given to other options that were available. It is certainly most irresponsible for the Board of the FNPF to force members to pay the price for its own highly questionable and imprudent policies and decisions which have led to massive losses on the investment front, running into hundreds of millions of dollars.
Furthermore, putting out a decree when a case is pending in the Courts, shows disrespect to the rule of law and the Judiciary.
The pay rise to the civil service has long been overdue and is welcomed. However, one questions the discriminatory policy of giving a 9% increase to the Police Force when others receive only 3%. Considering that civil servants have not been given a pay rise in five years, the increase could have been higher.
Likewise, the increased allocations to the Health and Education Ministries are welcomed.
Budget 2012 makes no reference to the State’s ballooning debt levels. One must also question the total lack of accountability in government’s handling of public funds. Government accounts and financial statements are no longer available for public scrutiny nor are the Auditor General’s reports made public. In his 2012 Budget address, the interim Prime Minister and Minister of Finance refers to a need for accountability but is ironically unaware of a noticeable lack of accountability and transparency in his government’s management of public funds.
More on Budget 2012 as details are made available.
LRV
Fiji Today FijiTodays Open Forum Blog 
just enjoy the higher take home pay and stop complaining for once….this is one of the best budgets ever
Stan Ulukau ….. sure take home more pay , but pay more for goods and services .. where does that take you ? A to B and back to A in ever decreasing circles and only we are the poorer for it ….
Ulusede ! Mau mau nomi lei vuli.
Stan – whats plan B should the tourists cash cow take a hit?
FNPF decree is a total slap in the face for the elderly. Frank and Aiyaz will be ok on their self determined Nur Bano salaries.
Devaluation middle of next year if revenue targets fall short. A myopic and fiscally irresponsible budget. An elected government or even this one will have to reverese many of these populist measures. I don’t see it being sustainable. Hope I’m wrong but Frank if you ever read this, PLEASE shelf the FNPF decree.
At least with more money in your pocket you have a choice how to spend it and there’s always the option of saving some of it for retirement.
@ The Future.
That is exactly the way prudent folks would handle this budget for now. The tax cuts will most likely have to be reversed in the (near) future as the fiscal deficit and our debt repayments mean that at some stage Santa Claus will have to morph into someone not so benevolent but I do not see the pension rates changing. Therefore down the line you will see a decrease in disposable income with significantly lowered pensions and inflation will continue to remain high. The challenge is to future proof our pensions so those who have worked hard and contributed meaningfully get to retire with dignity. The FNPF announcements need to be shelved and a fairer solution found.
Our parents/grandparents deserve better than they got.
THE JUNTA OF THUGS TALKS ABOUT TRANSPARENCY BUT IS A MASSIVE CROOK RUNNING SCAMS.
THIS IS A ALICE IN WONDERLAND BUDGET BY NO SCHOOL FALLA, FIJI WILL NOW FOR SURE GO BANKRUPT FASTER.
FIJI IS DOOMED WITH NO MORE GOV REVENUE.
Tax for nightclubs with turnover over $1m. Hmmm, how you gonna monitor the mountains of cash going straight from the dance floor to the Suva Point safe? Yeah Gary, we know.The old getaway van is a good disguise.
Watch how restaurants, nightclubs, cafes start to engage in cash only business to hide the cash. Happens already. I should know. I use to work in many such establishments. Boss picks up cash at end of the evening and takes home to count. dream on Aiyaz.
Nightclubs every where are also known as Laundrys – Viti no exception.
A prolonged global economic recession is expected next year. No country in the world will be immune from its impacts.
Tourists that come to Fiji will face economic hard times and those that still take a holiday in 2012 and 2013 will be price sensitive.
The $150 departure tax is a sign of fiscal desperation and will surely turn tourists away from Fiji in favor of competing destinations such as Vanuatu, Cooks, Solomons, Hawaii, Tonga and Samoa. The recession will force these countries to offer even more cost competitive holiday packages and Fiji will find it hard to compete because of the very high departure tax.
Logically, it makes sense to reduce tourism sector consumption and profits since its the strongest sector in the economy but its suicidal to increase the tourst’s entry costs which includes departure tax and airfares.
The reduced corporate and personal income tax and threshold is a political giveaway. Business profits are low because of depressed domestic demand and low exports while peoples real incomes in Fiji has reduced by more than 30% since 2006 (on the account of high inflation and wage freeze in most sectors including government). Therefore, the after tax income of people in 2012 does not represent a real again at all. People are still worse off.
The depressed state of business financial performance and peoples real wages in Fiji is a direct result of Frank’s Government’s poor economic management. They are trying to offer tax concessions as a political trade-off and a survival strategy.
Fundamentally, the economic situation in Fiji will not improve unless there is recovery and strong growth in private sector investment especially foreign investment which depends on the restoration of investor confidence which in turn depends on a change in the political situation and return to democratic government. The World Bank has just recently restated this fact.
No amount of economic stimulus offered by the regime will work. Franks’s Government is the cause of the lack of investor confidence.
For as long as they are in office, people will not invest in Fiji except the Chinese who are the worst capitalists on earth because of their unethical habits and serious lack of respect for the local community and culture.
Correction – Logically, it makes sense to tax tourism sector consumption and profits since its the strongest sector in the economy but its suicidal to increase the tourst’s entry costs which includes departure tax and airfares.
Lets go back a bit in time here. Since the 2006 coup the ordinary workers and most sectors of the economy suffered through inflation,higher unemployment and generally increased cost of doing business. The tourism sector was the only beneficiary of the 2009 devaluation. In real terms (adjusted exchange rate) our exports did not increase. Hoteliers and hospitality industry operators made huge gains while the rest of the country dealt with an average inflation rate of no less than 15% year on year including 2011. (10% average according to RBF stats).
Essentially the pro tourism strategy was delivering jack. Wage rates stayed the same for locals while expats were laughing all the way to the bank as they get paid in foreign currency. The tourism industry has the highest concentration of expats in any established industry.
New PS Finance, Waqabaca has undoubtedly influenced fiscal policy to help local people. Good job, sir. Also lent Tikolevu some muscle as FIRCA so Aiyaz and Aunty are not able to grant concessions nilly willy to their cronies.
As for the tourism sector, well they have to pull their weight. Dixon Seeto needs to stop whining.
Deficit containment and revenue collection has to be spot on if these measures are to succeed. With the predictions of a possible second global recession next year it it wise to move off the tourism only strategy and spread the risk.
The IT/luxury goods/mobile handsets sectors should have been taxed further with a 15% import duty tariff on all IT related goods. Easy $30 to $40 million there. Perhaps not too late. Just introduce it.
If it does not come right the government will present a mini budget and reverse some of these tax cuts.
Have to feel for the pensioners though.
The thug dictator after women bashing is gunning for election win with this budget.
His destiny is to run the cassava patch again and be arrested by people power.
Remove the PER and then see the people power.
The people will never forget the rape of democracy and give liumuri back to junta not vote in election.
Anyone notice the real turncoat JAK calling it a “perfect” budget? Perhaps he’s trying to avoid a tax audit. This chameleon needs a good kick up the arse and must be kept at arms length by all governments.
When every thing is going up in price the pay rises do not improve your standard of living. Who is Banana man think he is fooling. Charging Tourists more will just put off tourists coming to Fiji. There are plenty of cheaper places in the world to go on holiday too.
Moronic. You cannot tax yourself out of a recession – nor can we hope to bleed the only viable part of the economy ($150 departure tax!!) that works.
They are not “fixing” anything, just attempting to plug the leaks from the holes that THEY created.
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please no swearing guys…..dont be so angry….we know that ratu mara is the son of boron but please no swearing…
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Is there really a need for such profanities?
A disceptation would in this case be a relevant course of action rather than the need for vulgarism.
It comes back to that old adage ” one can refine a cannibal but one cannot remove his cannibalistic proclivities”
Mudou o kawa beka ni drami, kevaka o via drami lei dramica mada na mata ni da nei Radio.
The overt departure taxes are not only a bureaucratic infliction but a rort disguised as tax, these idiots in this fricken regime ought to be encouraging tourists to visit and spend up large rather than to pay exorbitant fees for the pleasure of departing Fiji.
@Swearing Anon
Sa levu wale na gusumu, luveni kawa ca ga o koko baleta sa rui vakasisila na nomu vosa. Vakaraitaki ga ni ta sukula kei na tawa lotu. Sa rui vakaloloma nomu bula.
Vinaka Sai
The decision to cut taxes (both income and company tax) is a bold gamble. The regime hopes to restore growth for the first time in five years.
For this gamble to have a hope of working) investors have to respond. They have to have faith that the funds they invest will be safe, which means they have protection from two things – one is the megalomaniac Sayed-Khaiyum, the other is devaluation in the medium term.
Sayed-Khaiyum has shown that he wants to stamp himself all over every institution in the country. Price control, pharmacies, anything that catches the attention of the megalomaniac as an opportunity to inflict his ego on the country with yet another decree, have all damaged investor confidence. Investors never know what regulatory environment they have to operate within.
And if ASK really doesn’t like you, like Mac Patel, he won’t rest until he has you thrown in jail.
Then there’s the possibility of devaluation. With the sugar industry going down the gurgler fast, one of our major export income earners is under threat and there are no clear replacements on the horizon. Tourism may recover more, but turnover taxes won’t help, and any hiccup in the ANZ economies (which depend on the global economy) could cut growth in its tracks. Mining might help, but we don’t know what to believe when we are drowned in propaganda from a regime that’s addicted to lying.
A lot of local businessmen will consider investing but they’ll also be exploring ways to get their money out of the country.
This budget is a real gamble.
@ Corruption Fighter
“For this gamble to have a hope of working) investors have to respond… Sayed-Khaiyum has shown that he wants to stamp himself all over every institution in the country… anything that catches the attention of the megalomaniac as an opportunity to inflict his ego on the country with yet another decree… Investors never know what regulatory environment they have to operate within.”
Well said – with this idiots in charge changing their minds and doing whatever falls out of their empty heads every ten minutes, who wants to invest in this mess?
Everyone with half a brain is trying to get their money OUT, not leave it here where the devaluation, mismanagement and interference by the corrupt regime leave any certainty as to title and entitlements completely up to the whims of these short-sighted cretins.
There are plenty from England, Mexico, Spain, and even Croatia, but there are very few Americans.
You should plant your non-kicking foot directly next to (not
in front or behind) the ball. The team that did
not score is out of the world cup. If you are interested in
college sports then you can get the best of TV
coverage of the same with DIRECTV, the leading satellite
TV provider in the United States. From this point, the game will last that length of time.