IF?THE?ENTIRE?MIGHT of the tourism industry’s trade association could not deter Government from raising the level of value added tax on accommodation, then it’s probably pretty futile for me to try.
Most of us understand the financial challenges facing our elected politicians, but you have to question the timing of imposing this increase. A 16-plus per cent raise just as the sector enters what in many people’s opinion is destined to be one of the most unpredictable summer seasons in our history.
I also seriously wondering if any substantive fiscal analysis was made prior to the choice of the implementation date. To remind readers, over 120 of our registered properties are classified as small hotels. Even in the good times many of these would have be fortunate to achieve an average occupancy level of 25 per cent during the eight long summer months.
Therefore this summer the majority will be claiming VAT refunds as a result of the considerably higher operational costs, which in most cases will far exceed any revenue generated over the same period.
From May 1, 2011, VAT will be charged at the rate of 8.75 per cent instead of 7.5 per cent, irrespective of when the booking was made or contract signed.
Individual accommodation providers will be left with the dilemma of either attempting to pass on the extra tax or being forced to absorb it.
Yet another element of doing business that clearly has not been budgeted for.
Would it not have been better to introduce the rate hike at the beginning of the next winter season?
During the Parliamentary debate I heard one senator argue the case that the removal of the environmental levy would partially or totally negate the increase in VAT. I had to chuckle, because in reality I cannot think of a single invoice we have received after the levy was removed that has reflected any reduction in cost.
Perhaps the senator could explain what measures Government has put in place to ensure savings were passed on?
The next question is what proportion of this increase in taxation is going to be spent on helping the industry become more viable?
Will part of the declared annual Barbados Tourism Authority budget of $92 million be used to support anything other that a heavily discounted marketing programme and the administration costs of the authority?
It is now nearly a full year since there has been a meeting of the Small Hotels Product Club which appears to be the only body designated to represent the majority of registered smaller properties.
During that time not a single promotional activity has be conceptualized or implemented which is targeted at the direct booking market to maximize earnings.
So once again, if you are not featured in a tour operator programme, you are out in the cold.
During what appeared to be a very well accepted address by the attending membership, the president of the Barbados Hotel and Tourism Association recently said, ‘Why would we allow a continuous increase in taxes on an industry that is already struggling?’
It’s a very good question.
