The government in Fiji has backed down from plans to introduce a 20 cents / litre tax on bottled water designed to curb the tide of luxury mineral water leaving the country for consumers abroad.

Bottled mineral water from Fiji is a multi-million dollar industry, generating over $150 million in revenue per year and employing over 700 people. Despite the abundance of Fijian bottled water on supermarket shelves in the US and Europe, one third of inhabitants on the south Pacific islands still live without access to clean drinking water.

The findings were revealed as part of a BBC Panorama investigation into the controversy surrounding the bottled water industry. It also showed that many Fijians were falling ill and dying of typhoid and other diseases related to contaminated water.

The Fijian government, whilst acknowledging the problem, had announced plans in early July to tax the export of bottled water, saying that water bottling companies should pay duty for exploiting the country’s limited supply of natural resources.

“Mineral water is a scare resource which will deplete, and a fair share of returns has to be passed on to the nation,” said interim finance minister Mahendra Chaudhry.

The tax was later scrapped after weeks of pressure from the water bottling companies who said the Fiji would stand to lose approximately $3million in export revenue each week whilst they halted operations in protest over the new tax.

A proposed tax on bottled water in Fiji has been scrapped following pressure by an industry lobby group on the island.

The interim Fijian government repealed its 20 cents per litre tax on bottled water following the factory closure of Fiji Water, the last of the bottled water companies to stop operations after the cabinet introduced the new taxation system.

Bottled water companies on the South Pacific island have welcomed the move. According to Fiji One News, the Fiji Bottled Water Institute, which represents nine companies, has said that consultations need to be held first on any future tax proposals before they are implemented.

Industry spokesman Jay Dayal said, “We are very pleased that at least the prime minister and attorney general intervened in the matter and resolved the whole issue. And now the bottlers will get together with the government and work out a form of compensation that is suitable to the government for the resource that we are extracting.”

Last year bottled water exports from Fiji counted for around $130 million, in an industry employing more than 700 people.

However, conservationists have pointed to the growing environmental costs associated with bottling water in Fiji. Typically plastic bottles are transported from China and then sent around the world to consumers in the United States and Europe.

A BBC Panorama documentary released earlier this year also highlighted the fact that a third of Fijians are still living without access to clean water. It showed that people were falling ill and dying of typhoid and other diseases related to contaminated water.

Bottled water giant Fiji Water has closed operations following the interim government’s decision to levy a 20 cents per litre tax on all bottled water, reports the Fiji Times.

The closure follows other water companies based on the South Pacific islands of Fiji who say they can no longer operate under the new tax.

Fiji Water is the second-largest imported bottled water brand in the US and has not been exported since July 1st.

“We have had to stop the purchase of raw materials and have nearly exhausted our supply of empty containers to load. We have been left with no choice but to stop all production and have shut down our factory,” Fiji Water said in a statement.

Fiji Water, which is sold in upmarket stores and restaurants and has appeared in many popular television shows, has been at the centre of controversy surrounding the bottled water industry in Fiji.

In February, an investigation by BBC Panorama reported that one third of inhabitants on Fiji do not have access to clean drinking water, with many people falling ill or dying due to typhoid and other contaminated water diseases.

It also revealed that the source of Fiji Water in the Yaqara Valley was originally discovered with British aid money as part of a plan to find water for local people.