What is this Environment and Climate Adaptation Levy (ECAL)

About once a month we have a client or colleague ask us “So, what exactly is this Environment and Climate Adaptation Levy (ECAL), and what does the Government do with it?”

So in the spirit of answering questions and putting this online so it’s easy to Google, here is the official Fiji Government presentation and talk about what the Environment and Climate Adaptation Levy (ECAL) is all about.

Environment-Climate-Adaptation-Levy_compressed

What Rate is Environment & Climate Adaptation Levy?

As of Budget 2020, the Environment & Climate Adaptation Levy (ECAL) is charged at the of rate 10% on the gross annual turnover of a prescribed service. ECAL is computed by applying the rate to the prescribed service amount. The ECAL is administered by FRCS however it will be collected by the prescribed service provider.

What is Environment and Climate Adaptation Levy – ECAL?

Fiji is a Small Island Developing State with big aspirations. We Fijians are determined to build an inclusive, prosperous, resilient and low-carbon future for ourselves, and remain steadfast in the battle against climate change, the single greatest threat to our future. We aspire to achieve sustainable socio-economic development that preserves our unique and pristine biodiversity, enabling our people to pass on our worthy inheritance
of environmental stewardship for future generations.

Meeting those aspirations will require innovative financing mechanisms that enable the mobilisation of large scale resources that meet Fiji’s development agenda in a climatecentric and environmentally sensitive manner.

In this regard, the Environment and Climate Adaptation Levy (ECAL) is a consortium of taxes on prescribed services, items and income .

It helps fund critical work across Fiji to protect our natural environment, reduce our carbon footprint, and adapt our economy, our communities and our infrastructure to the worsening impacts of climate change.

When you spend time in Fiji, and pay ECAL, you are helping us secure our future by boosting our climate resilience and reducing our national greenhouse emissions.

ECAL is collected by the Fiji Revenue and Customs Services (FRCS) and administered by the Ministry of Economy in accordance with the Finance Management Act 2004 and the Financial Instructions 2010. Proceeds from ECAL are used to finance selected projects programmed in the National Budget.

Since its introduction in the 2017-2018 financial year, the Environment and Climate Adaptation Levy has collected FJ $270.2 million in proceeds of which FJ $255.9 has been used to finance 102 projects to date programmed in the National Budget to address climate change and environmental conservation.

This innovative fiscal financing tool has helped raise unprecedented levels of public finance to support climate change and environmental conservation programmes.

To enhance community level actions to manage the impacts of climate change, the Fijian Government will soon allocate a certain percentage of ECAL proceeds into a Climate Change Relocation Trust Fund to help raise bilateral and multilateral donor funding to relocate low lying vulnerable coastal communities facing the brunt of climate change.

This bulletin gives a comprehensive breakdown of how ECAL is collected, managed and utilised and includes information on specific projects that ECAL funds have helped make possible.

ECAL is a broader version of the Environmental Levy introduced in 2015. According to the Environmental Levy (Budget Amendment) Act 2017, ECAL is made up of the following: 10% tax on importation of luxury vehicles; Miscellaneous – inclusive of 10% charge on super yacht charters and docking fees; 10% income tax on individual earnings of more than FJ $270,000; 20 cents levy on plastic bags; and 10% ECAL on prescribed services offered by business with a turnover of FJ $1.5 million.