I really thought the last person I would hear make these statements would be Adrian Loveridge. Surely your influence is at the highest levels when it comes to the tourism product under the Dems? I do not really think that you can disconnect tourism from the artificially designed increases being put by the Minister of Finance; perhaps you are seeing what persons have been saying since the first budget presented by my friend the late Prime Minister Thompson. I said then that you could not tax your way to greener pastures, since then I said you cannot ask the population through increased taxes to bear the brunt of the recession in a small developing country so dependent upon services. Over to you Adrian; if you cannot get the DLP to listen who will? The electorate, time will surely tell.

Brutus,

The point was that you cannot continue to impose unbudgeted staggering increases (way above inflation) on an industry that is already on the brink of colapse. A 16.6 % increase each year for three consecutive years is not sustainable for any business, let alone during a recession.

The ‘well run, efficient, well captitalised’ (who is to judge) issue is something completely different and why should you only apply this to hotels?
Were Sandy Bay, Sandridge, Ginger Bay, Coconut Creek, Club Rockley. Eastry House, Glitter Bay, Kings Beach Paradise Beach (Cunard) and Silver Sands (who even received TIRF funds) all ‘under capitalised’ or badly run and not efficient?

All I will say is that it is becoming more and more apparent that an ‘Eviction Notice’ is defintiely being prepared for serving. What portends for the party if the Budget is further reversal i.e U-Turns on earlier policy decisions?

@Adrian Loveridge,

What staggering increases on the INDUSTRY are you talking about? Are you suggesting that all hotel properties were reassessed upwards 50% for land tax purposes?

I never said that the question about ”well run, efficient, well capitalized” only applies to hotels. But hotels already benefit from a great deal of govt assistance and you were the one complaining about the number of hotels going out of business as if this does not happen daily to other types of business.

Hotels should be able to survive without all of these government concessions (check the Tourism Development Act) or there is something wrong with the business model.

@David – I don’t see all of the other small businesses begging as much as the hotels do – well, their representatives do the begging.

@Brutus

There is the view hotels are forex generating entities and therefore command support than other business’ in the distributive/retail sectors.

Brutus,

‘all the Government concessions’. You really have to explain that one to a small hotel operator on Barbados. Apart from the Land Tax ‘concession’ please tell me what ‘all’ the other concessions are that a small hotel operator finds it cost-effective to access?
Look at the facts, our 160 or so registered hotels barely record and average of 50 per cent annual occupancy. Around 3,500 rooms are EMPTY every single night of the year.
I am not into begging, just pointing out that Government policies (or lack of them) have consequence.

@Adrian Loveride – I already referred you to the Tourism Development Act. See for example – http://www.barbadostourisminvestment.com/legislation_and_incentives.cfm

“Provision is made in the Act for investors in tourism projects to benefit from write off of capital expenditure and 150% of interest; there is also exemption from import duty, value added tax and environmental levy in respect of furniture, fixtures and equipment as well as building materials and supplies.” Plus enhanced tax deductions for costs incurred in training of employees and Marketing. Please don’t tell me that it is not cost effective to access these concessions.

We could probably simplify the system and just exempt hotels from corporation tax as I doubt that very much is collected from them anyway. (However they should have to earn this exemption.)

Hotels have already received two cash injections from govt since the start of the financial crisis. Don’t forget the reduced rate of VAT on accommodation.

What about all of the money the BTA spends? What about the soft loans that are available?

If there are 3,500 empty rooms every night then perhaps we have too many hotels!!

I have no doubt that there is room for improvement in government policy, but surely there is as much room for improvement by players in the sector itself. We hear a lot about what government can do so when will we start hearing as much about what the sector needs to do?

@Adrian Loveridge,

If you just paid over $70,000 in corporation tax then surely the increase in land tax (which will reduce your corporation tax) or the valuation fee of $7,000 (which will also reduce your corporation tax) plus fully refundable VAT of $1,225 will not be a problem for you to pay. If it will be a problem then perhaps you SHOULD have applied for the TIRF funds.

I don’t think I am under any misconceptions. The exemption on input duties is available whether or not you are paying corporation tax, and the corporation tax concessions may be used to reduce your tax to nil. Don’t forget the reduced VAT on accommodation and the discounted land tax.

The list of TIRF recipients was published on this blog and it did not look like a small number of recipients to me. The second tranche in particular was widely disbursed. If eligible players did not receive any funds then whose fault was that?

Are you suggesting that small hotels do not benefit in any way from the BTA’s activities unless they are specifically marketed? I find that hard to believe! However you seem to agree that the ones that are members of the Intimate Group do benefit so I think my point still stands – they are already substantial benefits available to hotels in Barbados.

I am forced to ask this question though, since I don’t know the answer – what is to prevent hotels that are not presently members of the Intimate Group from becoming members and accessing the benefits? Depending on your answer I might be a little more sympathetic to your point.

@ David
Can you find out from the Land Tax Department how they arrived at the figure of a 50% increase in valuation for hotels? Brutus is pulling
information from Adrian like a dentist doing an extraction.

David/Chuckles/Brutus,

Exactly how Government and why Government arrive at any increase in land tax valuation is a mystery to me as it does seem to reflect the actual market place. I fully accept the scenario that it has to go up but its about the timing and percentage increase.
Do we have too many hotels or is our marketing not effective enough?
Or is it down to the product, that in some cases does not meet the customers expectations?
For many (six) years membership of Intimate Hotels was denied to us for not being sufficiently indigenous. It was the ONLY trade association on Barbados that prohibited Permanent Residents from becoming members, contrary to the law of the land.
That fact has sadly put us off joining.
Brutus, don’t forget the soft loans and other concessions which are only available on certains conditions.

Chuckles,

I obviously haven’t explained my comments very well and apologise.
It not the increase, its the timing.
We have always (even when its been really difficult) paid our statuatory obligations and almost always on time. I am happy to accept that our property has increased in value even during the worse economic recession in eighty years and we will pay due taxes, if possible ontime.
My concern is that we have been asked to spend another $8,000 plus (new valuation) at just about the worst time of the year to be able to object to the increase in land taxes.
At this time of the year we close the hotel to continue ongoing renovations
and go into a battle with VAT to get refunds paid in a reasonable time. In the past we have been forced to wait up to 15 months and 5 days for a refund.
If we are a day late in submitting a VAT return its a fine and a penalty.
If we cannot (at this time afford) a valuation the increased land tax will cost us over $15,000 over the next three years (at the reduced rate). That money has to come out of something. Reduced marketing, limiting our improvements, less staff or reduced hours working. There are only so many ways you can reduce overheads.
All those above options will also have a cost to Government and I guarantee you they will be higher that the increased land tax revenue they would have collected over the three years.

@Chuckles – I suspect that Adrian’s valuation has increased so much because the property was undervalued for land tax purposes in previous years. You see, after being in business for all of these years he must have been expecting a valuation at this time but it obviously never increased enough before to cause him this much angst.

He doesn’t need the government to allow him to pay the land tax later because he has until March 31 next year to pay (speaking under correction).

What he is really asking for is the valuer to let him pay the valuation fee later in the year. Of course he would have us believe that having just paid $70,000 in corporation tax, neither he nor the company has enough in savings to pay the $8,000 valuation fee (or maybe a cheaper fee if he would shop around or haggle).

All of this over another $5,000 per year in land tax which apparently might cause him to reduce marketing or spend less on improvements (note that he gets an enhanced tax deduction for both of these) or lay off staff.

I am sorry if my tone sounds harsh or dismissive but I am reacting based on my perception that this is a very personal issue being portrayed as an issue for all small hotels, and that it is being blown out of all proportion.