The head of the Bahamas Tourism and Hotel Association (BTHA) is calling for Bahamians to throw their support behind a Smart Tax; one that protects the tourism industry, government revenue, the economy and employment opportunities now and into the future.
Pointing to the major tourism investments on tap for the country, BTHA President Stuart Bowe said such progress is being overshadowed and in jeopardy by the pending plan to implement a Value Added Tax (VAT) this July.
“In its current form, VAT threatens to affect our competitiveness, business viability and the more than 97,000 direct and indirect Bahamian jobs created by a growing tourism industry,” Mr. Bowe said in a statement.
“The government’s current VAT proposal would have an unintended cost impacting all of us by slowing the recovery of the tourism industry, shrinking the economy, and reducing the amount of the nation’s foreign currency reserves.”
Last year tourist spending was estimated at $2.4 billion in The Bahamas.
According to Mr. Bowe, that spending created over 97,000 jobs, sustained hundreds of Bahamian businesses of all types and produced more than half of the country’s tax revenue.
The hotelier said on the other hand, initial estimates show that as proposed, VAT raises the cost of a family vacation to The Bahamas by at least $500.
“Faced with this, potential visitors would opt to go to less expensive destinations, as many already do. We would all suffer the consequences,” warned Mr. Bowe, who also serves as Senior Vice President and General Manager of the Coral/Beach Towers at Atlantis.
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The BTHA proposes the country considers a Smart Tax plan approach that would keep the local tourism product strong.
“By maintaining current tax levels on tourism-related businesses—like lodging, food and beverage, casino gaming, conventions and meetings, attractions, excursions, marinas and luxury retail—the country can stimulate travel growth while implementing tax reform” Mr. Bowe recommended.
“A Smart Tax approach would also look to other options for raising revenue, considering matters like a shared payroll tax, the regulation and taxation of web shops, improving tax collection methods, reducing waste and fast tracking government efficiencies and fiscal reforms.”
The BTHA is hoping to lock in the support of all Bahamians by logging on to www.TAB242.com.
According to State Minister of Finance Michael Halkitis, VAT was selected ahead of other revenue boosting alternatives as it was shown to be the second most favourable tax for supporting economic growth, trumped only by Real Property Tax.
He also pointed out that more than 140 out of 193 United Nations member countries have implemented VAT since its inception in 1954.
However, the government has said it is open to constructive suggestions on any viable alternative to VAT that would be both practical and capable of replacing the revenue lost from the impending reduction of customs duties without overburdening the middle class.
