Dr. Kishti Sen, International Pacific economist at ANZ, commented on the 2024 budget comparison with 2019 saying, “BOTTOM line — comparing 2024 to 2019 is not like for like.” The exchange occurred before last Friday’s budget, amid speculations that the Government intended to raise the departure tax back to $200, its pre-COVID level.
Dr. Sen expressed skepticism about the revenue impact of increasing the departure tax, stating, “The government is well within its rights to look for revenue to fund its expenditures and deliver on its core services, but can a few extra dollars on departure tax really shift the dial on revenue? Probably not.” He advocated for keeping the tax unchanged to maintain Fiji’s competitiveness in tourism, emphasizing the importance of increasing tourist numbers and in-country spending.
Tourism has been crucial to Fiji’s economy post-COVID, contributing to a 20% GDP increase in 2022 and 8% in 2023. However, growth projections have been revised downwards to 2.8% for 2024, driven primarily by tourism. Concerns have been raised about making Fiji even more expensive with higher departure taxes, considering it’s already deemed costly compared to other destinations.
Minister of Finance Professor Biman Prasad acknowledged that the departure tax would increase in phases, from $140 to $170 on August 1, and then to $200 by the same date next year. This raised concerns about the immediate post-COVID boom and whether the still strong visitor arrivals give a false sense of security.
Dr. Sen highlighted the financial strain on travelers, especially from Australia and New Zealand, Fiji’s major source markets. He noted that a family of four would soon need to pay $800 in departure tax alone, making Fiji less accessible amid rising living costs and mortgage rates. According to his report, while visitor arrivals from Australia surged post-COVID, they are now declining. Efforts must be made to maintain at least 7 percent of Australian travelers.
“Right now, household disposable income, which represents the spending power of consumers, is squeezed. More of consumers’ gross income in key markets is taken up in interest payments for mortgages and personal debt,” said Dr. Sen, attributing this to the increased home loan rates in Australia and New Zealand. He stressed that comparing 2024 and 2019 is “not like for like,” noting the higher cost-of-living pressures today.
He added that high departure taxes and expenses might deter potential tourists, especially as they seek value-for-money propositions for overseas holidays. Despite the tax being $200 in 2019, the current economic climate makes such hikes more challenging.
As Fiji’s tourism market strives to bounce back, further increases in departure tax could benefit competitors, urging policymakers to reconsider before the upcoming budget debate.