LOCAL HOTELIERS will not be subjected to an increase in Value Added Tax (VAT) at this time.
In fact, the word givenĀ late yesterday by MinisterĀ of Finance Chris SincklerĀ to anxious hoteliers was that their VAT?would be retained at 7.5 per cent, at least for the time being.
He told the SATURDAY SUN that while it was not explicitly stated during Mondayās Budget presentation, the sector would definitely be in line for tax relief.
āBy word of the Minister of Finance it can happen immediately,ā Sinckler said, adding that the necessary legislative adjustments to bring full effect to the changes would be made by early January.
Ā The minister also pointed out that under domestic regulations the sector was entitled to a 50 per cent VAT adjustment.
Therefore, āif you increase to 17.5 per cent, theirs will naturally move to 8.75 per cent but we have agreed that for the purpose of allowing the sector to remain competitive we will make the appropriate adjustment to ensure the rate remains at 7.5 (based on a 15 per cent VAT) at this timeā.
Sinckler also hinted that VAT?reprieve could be on the cards for other tourism stakeholders, noting that āthose people who sell to the boats would also have an issue because their pricing is locked inā.
Relief to hoteliers will cost the Government at least $10 million in projected revenues from an increase in the VAT, which officially takes effect December 1.
Very happy
Ā Ā Ā Reacting to Sincklerās announcement, president of the Barbados Hotel and Tourism Association, Colin Jordan, welcomed the development, saying, āweāre very happy about thatā.
āWhat weāve also heard is that Government is indicating that it is not their intention to dampen the business of tourism. Theyāre depending on tourism, along with construction, to pull us out of the situation where we find ourselves in, and so theyāre not going to do too much that would impact negatively on tourism,ā he added.
On Thursday night, tax expert Charles Tibbits had called on Government to clarify if there would be an increase in the VAT applied to the accommodation sector.
He spoke during a panel discussion sponsored by the Barbados Association of Journalists on the topic Is Taxing Barbadians More The Best Option?
Tibbits said there was need for a high degree of certainty during this transition period.
He argued that while an increase in VAT could have been passed on to guests who had made prior bookings, āin business when you sign a contract you sign it in good faithā.
āI doubt very much that people overseas will honour an additional increase in the VAT,ā Tibbits stated.
However, in a passionate response, Permanent Secretary in the Ministry of Finance, William Layne, challenged Tibbitsā views about contract difficulties.
āIt is a fact of life that taxes and legislation changes occur every day throughout the world,ā he said. (KJ/NB)