Baha Mar VP of External Affairs Robert Sands said if Value Added Tax (VAT) is introduced at any percentage higher than five, its effects could be detrimental to the tourism industry.
According to Mr. Sands, the future of the country’s tourism industry may be put in jeopardy if the government decides to implement a tax set at a rate that’s not friendly to tourism.
“The small man at the end of the day bears the brunt of that burden,” he said.
“Every single thing that he or she does will be impacted by that rate. Going to the doctor, putting gas in his car and buying groceries are just a few examples. Everything impacts him directly. If our smart tax five-point plan is implemented and some of the alternatives are implemented it would mitigate against that level of impact on the small man.”
Last week, Prime Minister Christie announced that VAT will be introduced at a rate lower than the 15 per cent initially proposed.
However, he said the government was also unsure with the new rate would be.
The Bahamas Hotel and Tourism Association (BHTA) has come up with a five-point plan that it believes would be less impactful on the small man than an overall high rate of vat.
“What we’ve said to the government in our five-point plan is to certainly delay VAT’s implementation,” Mr. Sands said.
“They should create alternative ways to supplement or replace VAT. They should also ensure that the tax reform impact on tourism is neutral so that we remain competitively priced. One of the big issues is that we must ensure that our tax packages sold abroad remain competitively priced, which is extremely important. We must also ensure that the cash flow entities remain unimpeded by any tax reform. It must grow and not shrink so that it could have a positive impact on employment going forward.”
The Baha Mar VP said what hoteliers are now debating is the 10 per cent tax that will be imposed on room rates and possibly gratuity, which Mr. Sands said will undoubtedly hike vacation prices for tourists.
He said this would place potential visitors in a position of questioning whether The Bahamas is worth the expensive trip.
“What the government is now suggesting is that we tax room rates at 10 per cent,” he said.
“Even gratuities will be taxed. The government is also suggesting that if these packages are purchased offshore that the person would be paying VAT on that as well. That is a double dip. You want them to pay on their room when they arrive and pay it offshore. These are some of the mitigating facts that we are advancing to the government to begin to address.”
Mr. Sands said that whatever decision the government makes, they should consider the impact it could have on the mega resort, Baha Mar, that has yet to be open.
