LOCAL HOTELIERS will not be subjected to an increase in Value Added Tax (VAT) at this time.
In fact, the word given late yesterday by Minister of Finance Chris Sinckler 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 Monday’s Budget presentation, the sector would definitely be in line for tax relief.
“By word of the Minister of Finance it can happen immediately,” Sinckler said, adding that the necessary legislative adjustments to bring full effect to the changes would be made by early January.
The minister also pointed out that under domestic regulations the sector was entitled to a 50 per cent VAT adjustment.
Therefore, “if 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 time”.
Sinckler also hinted that VAT?reprieve could be on the cards for other tourism stakeholders, noting that “those people who sell to the boats would also have an issue because their pricing is locked in”.
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
Reacting to Sinckler’s announcement, president of the Barbados Hotel and Tourism Association, Colin Jordan, welcomed the development, saying, “we’re very happy about that”.
“What we’ve also heard is that Government is indicating that it is not their intention to dampen the business of tourism. They’re depending on tourism, along with construction, to pull us out of the situation where we find ourselves in, and so they’re not going to do too much that would impact negatively on tourism,” 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, “in business when you sign a contract you sign it in good faith”.
“I doubt very much that people overseas will honour an additional increase in the VAT,” Tibbits stated.
However, in a passionate response, Permanent Secretary in the Ministry of Finance, William Layne, challenged Tibbits’ views about contract difficulties.
“It is a fact of life that taxes and legislation changes occur every day throughout the world,” he said. (KJ/NB)
