Reactions to the 2011 Budget

The PM's Budget Address. Click Fiji Government Online
Price Waterhouse summary of Budget. Click to download

Australian Broadcating Corporation http://www.radioaustralia.net.au/pacbeat/stories/201111/s3376917.htm Fiji budget slashes income and company taxes. Bruce Hill interviews Prof Biman Prasad who says the budget "represents one of the most significant changes to Fiji's economy in recent years." Fiji's budget has slashed taxes on poor and middle income earners and corporations in what is being described as a bold initiative to stimulate growth. The top income tax rate of 31 per cent has been reduced to only twenty, and the tax paid by corporations comes down from 28 per cent to twenty. The requirement for overseas companies to be at least forty per cent locally owned has been removed.

Unfortunately Radio NZ International failed to compete with its trans-Tasman cousin. It could only cite Bainimarama (the Budget would "empower Fijians, modernise the nation and strengthen the economy (and) grow the economy, ensure fiscal sustainability and attract investors.") Of the Budget content, it mentioned only that money was allocated for electronic voting and constitutional change.

The Reserve Bank. Boosting further confidence in the economy, the Reserve Bank of Fiji announced it has further relaxed exchange controls. The increased delegated limits means that’s there is confidence about the outlook on the level of foreign reserves, which is currently around $1.5 billion.

The measures should result in improved efficiency for businesses. The RBF will also allow commercial banks to write more forward contracts for importers as well as re-introduce offshore investments for individuals up to $10,000 per family per annum.

Governor Whiteside said that the budget presents an opportunity for the private sector to grow and inject revenue into the economy. The Bank has approved the licence application for an as yet unnamed European bank to establish operations in the country. -- No:2135/MOI) RBF

Sir James Ah Koy: "Wonderful Budget". The former Minister for Finance, business entrepreneur, and Fiji’s former envoy to the Peoples Republic of China,says: “The Budget seems very, very good. In fact, exceptionally good. I commend the Prime Minister for coming up with a very good budget. We need to look at it and see exactly how it comes out but there have been a lot of good things and a lot of pluses that we’ve seen. But it really sounds good. It of course is a wonderful budget.”

Sir James says the budget which focuses on empowering Fijians, modernizing Fiji and strengthening the economy is a well balanced budget that focuses a lot on encouraging people to change their mindset and start thinking how they could improve their lives and at the same time contribute towards a better Fiji.-- Based on No:2132/MOI

The Fiji Labour Party website, however, carries a different story. "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." Click on the site to read more.

New Taxes to pay for cuts. Fiji Live carries the story about new taxes to pay for the income and company tax cuts. These include:
  • one per cent voice call tax on all telephone bills and prepaid cards
  • a two per cent levy on outstanding balances on credit cards
  • a 20 per cent fringe benefit tax regime
  • the tax deductiable employer contribution to FNPF will only be allowed at 50 per cent.
  • an increase in departure tax from $100 to $150
  • a levy of $7,500 upon point of sale on luxury cars exceeding 2500cc, and a levy of $20,000 for those over 3000cc
  • a 20 per cent levy on some insurance premiums
  • the Hotel Turnover Tax, renamed the Service Turnover Tax, will now apply to some other parts of the tourism entertainment industry, including rental car operators, in-bound tour operators, recreation, entertainment and cinema operators, bars and night clubs

Qoriniasi Bale commenting on Coup 4.5's coverage said...
"If the taxes had gone up, C4.5 would have complained. Amazing that even when taxes go down, you find something to complain about. Where the money comes from is very clearly shown in the budget... increased taxes on tourism, alcohol, and the richest people in Fiji."

Even the moderate anti-government blog Fiji Today thought it an "excellent budget": "A good budget for Fiji………..Tourists to fund most additional income……Turnover tax of 15% extended to cover most tourism operations, bars and nightclubs. Overall an excellent budget at first glance but many details are not yet available. A better post after some time to absorb the details…"

Business tycoon Hari Punja believes the 2012 budget is a move in the right direction by the Fijian government. Focusing his comment on the small businesses, Punja told Fijilive one important feature in the budget was the government's recognition (of the) importance (of) local industries.

Employers pleased. Fiji Commerce and Employers Federation has tagged the budget a popular one that "has all the ingredients to see real growth in our economy."Chief Executive Nesbitt Hazelman says it puts more into the pocket of workers, and allows businesses to support expansion and growth opportunities through reduced Corporate Tax. A key feature of the FCEF submission to government was the reduction of both fiscal and import excise duty on trucks and prime movers. Hazelman says they are extremely pleased the government has responded to their request and has made major tax concessions.

Consumer Council CEO Premila Kumar said "justice has finally been done for the consumer" and the tax cuts were in line with the Council's submission to increase consumer spending power. "From the Council's point of view the Budget is a very well thought out and clever allocation of resources. It shows quite a lot of consultation and planning went into the Budget."

Where's the money coming from? In addition to the new taxes (see above), government is expected to borrow $195m for the 2012 Budget, which would be sourced domestically.According to the Budget supplement, the key focus for the government in the medium-term would be to ensure that government's financing requirement was fully met and that debt was maintained at sustainable levels.

Halabe says Budget is a "game changer." Well known Mark One Apparel garment manufacturer Australian Mark Halabe describes the 2012 National Budget as a game changer. He thinks the Budget will "surely open up our economy and boost investor confidence. The new taxation policies will attract a lot of offshore investors into the country and this will have a positive impact on Fiji’s economic growth.”

“The 20% tax decline will surely seal the deal for investors as they will be able to pump in more funds into their projects. There is a scope for growth and with good policies put in place by the government, the export market will surely thrive,” added Halabe.

Last words by a Jeremiah who is "missing something"... "It's a miracle! Under the unelected junta the economy is booming admidst abject poverty and a future loaded with debt. I must be missing something." (Comment on my blog)

Comments

sara'ssista said…
did the interim AG's aunt still paymaster? And there is still a government audit office that is actually allowed to publiclise it's reports??
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Anonymous said…
While the nation praises the budget, the Labour Party, the champion of the poor in Fiji, remains negative. It is also sour grapes Chodry, you will sink with the millstone around your neck! You may want to share from your loot stashed away in Australia. It will help Fiji and your poor simple, innocent and poor rural folks. Then only you can regain some credibility.
Anonymous said…
Wonder what people in the FDFM (Mara, Baledrokadroka, Frankel, Kaitani, Brij Lal et al) think of the budget? They will find negatives anywhere.
Anonymous said…
Croz, you are behaving like a complete idiot; all the praise is offered in an arena of total media censorship. You will not find a single criticism anywhere in the Fiji media. You, on the other hand, have freedom, and yet you slavishly go along with the notion that cutting tax nearly 100 percent and doubling the deficit is some how clever and amazing. Fiji is now financially a ponzi scheme - you know it, just will not say it. Makes you the double fool
Anonymous said…
Only an idiot can see a negative in something that is positive. Even Qori Bale has praised it. But then, there are no shortage of idiots who will never see or refuse to see and accept the truth.
Anonymous said…
Why on earth would Fiji need another bank or finacial services provider when the market is already saturated.

The vaults are full. You have no takers for your credit, not at interest rates that mean a doubling of all finacial credit in 7-10 years.

Our 3rd. world economy, subject to coups, droughts, floods, hurricanes, parasitic army and ineffieicent public and civil sector, through in massive corruption and foreign owned shylock bankers and what do you have....a slave nation.

black and grinding poverty working hard for an illusion, a dream of a better day ahead
Stats confuse me said…
Croz,

You are a very clever man and I was hoping you could shed some light on something that is confusing me with this budget.

The Government is forecasting the GDP for 2012 is $7,223.7m.
PWC in their report have $4,545.3m.

I can’t find the Government data from previous years but PWC have the actual GDP in 2010 as $4,351.8m.

Can you help me understand where the difference of nearly $3bn comes from?

Thanks
sara'ssista said…
presumably if you are not happy , you would write to your local MP? Better still, address it to the Military Council suggestions box? Oh yes they are a 'listening regime' this one.
Anonymous said…
3bn part of the 6bn that was coming to fiji after the 2000 coup. lol

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