Fiji’s government has announced a significant reduction in the Value Added Tax (VAT) to 12.5%, effective August 1, 2025. The VAT cut, which lowers the tax from 15%, is expected to provide $250 million in tax relief to citizens. This move comes in response to increasing calls for VAT reduction and aims to alleviate the financial burden on families facing external price pressures due to rising costs of living.
In a statement made during the budget announcement for 2025-2026, Finance Minister Professor Biman Prasad described the tax cut as a “bold decision” by the Coalition Government. He added that in conjunction with the continuation of zero VAT on 22 essential items, the total VAT relief will equate to $500 million. The zero-rated items include basics such as flour, rice, sugar, and prescribed medicines.
In addition to these tax measures, the budget allocates $10 million to combat HIV, addressing a growing public health crisis as the number of cases in Fiji hovers around 7,000. The government allocates further resources to health initiatives, including $4.7 million to support kidney dialysis treatments, showcasing a commitment to healthcare enhancements.
This budget also reveals substantial investments in infrastructure, with $284 million earmarked for upgrades to water supply systems and treatment plants—addressing long-standing issues of water accessibility in multiple regions.
To ensure businesses pass on these tax savings to consumers, a new enforcement taskforce has been set up. This taskforce will monitor prices closely and take action against any unfair practices that may arise as a result of the tax cuts, reinforcing the government’s commitment to consumer protection.
Fiji’s financial outlook appears optimistic, with projected economic growth upheld despite global challenges. The government’s focus on reducing living costs, along with these progressive health and infrastructure investments, suggests a proactive approach in fostering economic resilience and improving overall quality of life for its citizens.
The budget not only reflects an urgent response to the current financial strains Fijians face but also embodies a long-term vision for sustainable growth and stability within the nation. It highlights an understanding of the challenges at hand and a determination to not only navigate these effectively but to emerge stronger collectively.
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