Prasad Says FijiFirst’s Tax Structure Reached 25%, Questions Usamate's Memory

Former Finance Minister and MP Professor Biman Prasad says Opposition MP Jone Usamate cannot criticise the current VAT structure while ignoring the tax system implemented under the FijiFirst Government — a system he says had hidden taxes that saw consumers paying as much as 25 per cent in combined taxes in some sectors.

Responding to Usamate’s attack on the 12.5 per cent VAT rate, Professor Prasad said that between 2011 and 2015, when Usamate served as a Minister, VAT stood at 15 per cent.

He further explained that from January 2016 to March 2022, VAT was reduced to 9 per cent by FijiFirst, but it was applied broadly across nearly all goods and services, with no basic food items zero-rated. This meant households were paying VAT even on essential items.

Professor Prasad said that during that same period, additional levies were introduced — a 10 per cent Environment and Climate Adaptation Levy (ECAL) and a 6 per cent Service Turnover Tax (STT).

He argued that while the headline VAT rate appeared lower at 9 per cent, the overall structure increased the effective burden on consumers.

Professor Prasad explained that in sectors such as restaurants and hospitality, these taxes could apply together:

- 9% VAT

- 10% ECAL

- 6% STT

In practical terms, this meant consumers could pay up to 25 per cent in combined taxes on certain services.

He said focusing solely on the 9 per cent VAT rate, without acknowledging ECAL and STT, presents what he described as an incomplete picture of what families were actually paying.

Professor Prasad maintained that restoring VAT to 15 per cent after the 2022 elections was a necessary fiscal measure to stabilise Government finances, adding that prudent fiscal management has since allowed the rate to be reduced to 12.5 per cent.