When my now wife and I ‘discovered’ a then virtually derelict Arawak Inn back in 1988, we never really set out to become seasoned hoteliers. More like having the privilege of living in a big ‘house’ right on the ocean and sharing it with a few friends and the many clients who followed us over the years with our British based tour operators business. Each restored and occupied room was another gallon of paint or new soft furnishing.
Our first major setback came when after paying the initial deposit to buy the hotel, the value of Sterling plummeted from over BDS$4 to the Pound to BDS$2.88 at the time of completion. As all our funds were brought in from overseas, there was no alternative as an option. Effectively this wrote-off literally every cent we had budgeted for renovation and improvement of the property. As new residents it was virtually impossible to borrow monies from the banks. They wanted a trading record, three years of audited accounts, cash flow forecasts and business plans among many other requirements. Suppliers, with very few notable exceptions, would not grant us credit and so we learnt very quickly, how to not only survive, but flourish and transform the hotel from earned trading revenue. While easy to say now, in hindsight, it was probably the best thing that happened, leaving us totally debt-free years later.
What often brings a wry smile to our faces is endlessly hearing the frequent uttering from frankly people who should simply know better, that Barbadian hoteliers have constantly got their hands outstretched begging for Government (taxpayers) monies.
The reality in our case, and I would think the vast majority of other hotel owners, that over the last 26 years we have not received one red cent from this or any previous Government. The single exception is a reduced rate of land taxes, but now that we are currently closed, even this concession has been withdrawn.
Like many, we will struggle to pay the first instalment of yet another unbudgeted expense by latest end of this month, the Municipal Solid Waste Tax. Especially at this time of the year which is the most financially challenging period for our beleaguered tourism industry. If we fail to do so, we are threatened with a 5% penalty plus 1% interest on and unpaid balance per month. I wonder how many people have calculated that this is an effective APR (annual percentage rate) of around 22 per cent interest.
Take an unpaid balance of $4,000 as an example. $200 in penalties plus 1% per month for six months adds another $240, so a mind boggling $440 in total. What is especially galling is that we are expected to pay this new imposition before we receive the tens of thousands of dollars we are still owed in NIS and VAT refunds, which have not accrued any penalty and interest, at least to us.
As the Minister of Finance rightly pointed out, with all the various collection agencies, now under one umbrella, the Barbados Revenue Authority, with a sole Commissioner, it should be a very simple task to resolve this problem. If this or any administration believes for a minute that small businesses like ours are going to our bank, cap-in-hand to beg overdraft facilities for the sole purpose of paying an additional inflicted tax, where payment is demanded at a few days notice, then think again.
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