The Adrian Loveridge Column – Anticipating the Impact of Additional Taxes on the Tourism Sector

[Barbados Underground] It is now a full month since the new Government imposed the mandatory room levy that our cherished guests have been asked to pay. How effective has the additional tax collection been and will we ever know what sort of overall revenue has been successfully collected?

Or how many the yet unregistered accommodation providers have so far evaded their legal duty by failing to account for and deposit these payments to the Barbados Revenue Authority?

What enforcement mechanisms have already or are planned to be put in place by the administration and how will they deter more property owners collecting payment offshore and avoiding due taxes altogether?

Like many perhaps, we have been watching prices on several products, expecting at least to fall after the removal of the almost obscenely called National Social Responsibility Levy. YES! We understand there are existing stocks to sell, but not in a single occasion have we experienced any reduction so far. In fact with many items, 10 per cent or more has been added to previously paid costs in May and early June.

Our response has been largely to avoid buying at these inflated prices, especially if at this time, they are considered non-essential.

Many observers out there may be under the illusion that a substantial percentage of our cherished visitors will not shop around to find how they can obtain a similar product at a price they have paid in the past and at least attempt to maintain the standard of a previous holiday here.

In many ways holidays or vacations are no different to other commodities and it is inevitable that the majority, especially those in the lower budget range will shop around. Just study what is going on with the battle between Walmart and Amazon at the moment. The giant box retailer, Walmart is ‘investing’ millions of Dollars into prime-time television commercials to hopefully remind shoppers that they can go online, order and have products delivered to their door at no cost, from them as well.

Our tourism planners and policymakers should not forget this, if they wish to safeguard the envious and diverse airlift that has been built up over the last few years.

Our UK market is probably the most sensitive at the moment with the continued uncertainly of Brexit, the fall in the value of Sterling, higher that forecasted inflation and rising mortgage costs, all play into the amount of disposable income for holidays.

Compound this with a staggering (even if necessary) increase in the cost or travelling to, staying in and patronising our various tourism offerings and it’s almost a given that this market will be under severe pressure in the months to come.

We all have to look at creative ways to help mitigate the possible loss of arrival numbers and the potential effect that will have on any economic recovery.

25 comments

  • A word to the wise is enough.

    This is the brilliant policy of a prime minister who everyone touted as the be all and end all of Barbados and who is fortunate to have 4 finance ministers and consultants to advise her.

    This tax on rooms and on airline travel will crush this industry – which is our main hope of survival.

    Looking on it seems clear that the government does not have a well thought out plan and the financial reality on the ground is not meshing with the wild spending they are doing – while at the same time taxing the poor people and the limping industry/sector that can least afford it.

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  • Trying to wrapped my mind around injecting a 70$ departure fee
    In cases of emergency who would pay such an excessive cost to leave the island
    If it was a forced policy meant to encourage barbadians to spend at home and less travel oversees to spend their money.the long term effect would also discourage oversees barbadians from making their usual annual visit to the island and other tourist looking for a cheaper place to visit
    A 70dollar departure fee is a very high price for a visit especially when added to the price of an airline ticket which is not cheap
    Already people are cheupseing and mumbling about the fee and when taken in account a family of four well need not say anymore

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  • It appears if we go with the Nation newspaper report the DLP has not been able to attract new blood. This is good for the third parties to grow. Will they?

    No fresh blood
    SDB MEDIA,
    Added 30 July 2018

    http://www.nationnews.com/IMG/861/82861/freundel-stuart3009-450×303.jpg?1527248189

    However, no new faces are among the at least four contenders who have put forward themselves for the presidency of the party which suffered a humiliating “red wash” in the May 24 General Election when it failed to gain a single parliamentary seat.
    The party is seeking to replace outgoing president and former Prime Minister Freundel Stuart, who retired from elective politics after the historic loss.
    Those angling for the post of president are former Minister of Environment Dr David Estwick; former Minister of Tourism Richard Sealy; former Minister of Sports, Youth and Culture Stephen Lashley and former candidate for Christ Church West Verla Depeiza.
    Conference August 12
    Reliable sources confirmed THE NATION’s information that in a little over two weeks, when the membership assembles at the annual general conference slated for August 12, the contenders for party posts will include all candidates rejected at the poll. (SDB Media)
    Read the full story in today’s Daily Nation, or in the eNATION edition.

    http://www.nationnews.com/IMG/339/84339/front-page-daily-monday-july-30-20185005-415×557.jpg?1532926845

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  • @David

    if that reports re DLP leadership is true, i would be disappointed but not surprised. the DLP seems to be lost somewhere between i dont know what we have done wrong and i dont know how to correct it.

    this is the prime time to groom new leadership and depart from the last iteration and yet the same washed up rejects are vying to lead the party.

    well select the cleanest dirty shirt. my bet would be between Verla Depeiza and Richard Sealy. Sealy was a v effective minister but he has no charisma and is no match for Mottley so i would chose Verla Depeiza and go from there.

    it maybe a stop gap measure until someone better comes along. never easy in opposition is it not to mention an opposition without presence in the HOA?

    i suspect there will be a lot division, name calling and soul searching

    i wish them luck

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  • It will take time. Anyone stepping forward must make a sacrifice of time and energy to take on a party that needs draconian transformation. The blogmaster has shared the view that in the short term those representing the DLP will possibly be seen as caretakers until others step forward. The challenge is whether the four mentioned see themselves as caretakers.

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  • While one can see why hoteliers would not want an increase in their already high prices and for the reasons the writer states, one must also consider that airline fares were increased when the price of crude was at an all-time high, baggage charges were increased, seat sizes were reduced, onboard catering was eliminated while at the same time a charge was instituted for seating choices. Fuel prices dropped to an all-time low and what did the traveling public gain….an increase in airfares and a further reduction in seat size along with the elimination of fee baggage and the introduction on a charge on carry-on luggage. Yet, passenger loads have continued to climb globally. Are taxes that critical to travel or is it only airline charges that can be raised without thought and the traveler will not give a damn?

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  • if what Wily coyote in another post is saying happens to be so – then the stupidity of Mottley’s decision to default on Bdos Sovereign Debt continues to wreck havoc on this country.

    What was astounding to watch was the haste with which she made such a consequential decision.
    .

    She gave little thought to what all the other prime ministers who have gone before her had done and why those still with us had advised her not to go that route – she was a woman in a hurry – listening to half-baked,snake oil salesmen like Avinash Persaud.
    .
    .
    It is clear that Mottley is totally out of her depth here

    She has achieved her aim of being the first female prime minister in Bim – but after that its blind man buff.
    .
    .
    Lots of press conferences – which solves nothing that is critical
    .
    .
    No roadmap to recovery
    .
    .
    A rush to keep campaign promises – even before you meet with the people who yuh begging to lend yuh something – and even though they have repeatedly said Bdos need to cut public expenditure – namely wages and salaries.Well we dun know how that went with the 30 ministers ( kay Macconey was the latest minister last week) and the financial consultants and political consultants etc.
    .

    This is a continuation of the BLP only know method of governance which is spend wildly and then drown Barbados in debt.
    .

    Now the main financial man is tied up with these court matters – let see how things continue to roll.

    Liked by 1 person

  • Well it looks as if Adrian is showing a signs of nervousness in Mia attempt of taking an axe and chopping off the hand that feeds barbados
    The rippling affect of these taxes not only going to hurt tourism but families who normally look forward to seeing family members retun visits who in general would provide for them necessary essentials that might be out of pocket reach in barbados
    Also consider that with the additional levy on water a visiting family member might feel a sense of duty to step up to the plate financially for any amenties the homeowner provided for the family member
    Gas is expensive.. water. internet.all attached to household use in effect might fall into the hand of the visiting member who feels a sense of responsibilty to help out
    Putting it all together the backlash from govt policies would hardened much resolve of the visting tourist or familly member into looking at other alternatives

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  • “Now the main financial man is tied up with these court matters – let see how things continue to roll.’
    +++++++++++

    I do not want to distract from the topic, but you made an interesting comment, as quoted above.

    I assume your mentioning of “the main financial man,” is perhaps a reference to Charles Herbert.

    Unfortunately, you have a penchant for labeling contributors that may criticize, question or challenge the intended purpose of your contributions……

    …… as BLP supporters.

    However, I will proceed with my questions.

    Rather than making wild accusations, without presenting substantiating evidence…… as you are known to do……..

    ………if my assumption is correct, could you please inform this forum….and provide the necessary evidence relative to how you know Herbert is a member of the BLP and he is that political party’s main financier?

    I believe under the circumstances, these are fair questions.

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  • I am nervous.

    The previous Government tried to argue against imposing the Advanced Passenger Tax (APD) stating it would deter visitors even though they imposed 17.5 per cent VAT on all air travel to/from Barbados.
    Now we have the VAT still, departure tax (and all the others) plus the new US$70 tax. Then add the mandatory room levy, the 2.5 per cent tax on ancillary tourism services, the higher fuel prices and new water/sewage charges.

    Who would NOT be nervous?

    In our case, a 50 per cent increase in water charges to help pay for sewage, when many of have to pay every single cent to have sewage AND WASTE removed and we do NOT get a garbage collection as a business.

    I understand the reasons why , as Tourism is the only major sector generating any meaningful revenue, but it will have a negative effect on arrivals.

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  • @Adrian

    What is your response to the tourism officials confirming that bookings are up!

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  • David, I am happy to believe the figures, but we should also ask about average stay and spend?

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  • @Adrian

    How can the average be validated if there is a recognition that successive governments include intransit and crew in the arrivals number?

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  • It is not unusal for bookings to be up this time of the year.
    Also take into consideration that repeat customers take early advantage of ticket and hotel prices
    The effect however would show most likely late year into next year
    I have family members who back and forth annually between america and barbados for hoilday visits but are having reservations about visiting after all taxes and additional fees are applied they say they rather send the money for the family members since flying home is not worth the cost
    Unfortunately the downside to such alternative cannot replaced the meet and greet high excitement of being together
    Also barbados small businesses mom and pop varieties lose out in the spend not to mention the high end brands

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  • Ocean 2 currently has a Staycation offer of BDS$179 per night for a junior suite with breakfast, tax and service included.

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  • @Adrian

    To bring clarity the person making the statement was Ian Gooding-Edghill who as you know works in the industry.

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  • @ David,

    If I was going on vacation I would search online for the best destination package that fits my budget.

    There are some who would be concerned about the taxes but others focus on the ” fun and Sun “.

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  • millertheanunnaki

    @ T.Inniss July 30, 2018 8:11 AM
    “This is a continuation of the BLP only know method of governance which is spend wildly and then drown Barbados in debt.
    Now the main financial man is tied up with these court matters – let see how things continue to roll.”

    You are just one blindly loyal yard-fowl unable to see the difference between scratch-grain and dirt or the forest for the trees.

    If the BLP is solely responsible for “drowning Barbados in debt” how do you explain the national debt moving from $6.7 billion in 2008 to its current level of nearly $14 billion?

    But Bajans should have voted back in the Destructive Lying Party in May 2018.
    For in so doing, they would be today meeting their Waterloo in their sinking flagship called the ‘Total Devaluation of the Bajan Mickey Mouse Dollar’.

    How can the Bajan dollar be worth more (on paper only) than the T&T $, the currency of its major one-sided trading partner and owner/controller of its commercial network for the importation and distribution of consumer items?

    So what it is going to be, Mr. T.I.?

    Pluck more of the feathers from the back of the only goose that is laying the golden forex eggs?
    Or should the BLP administration follow the advice of trimming the fat off the obese army of occupation by at least 4,500 as recommended by the now recanted Deliar Worrell who has had his Damascene moment 5 years too late?

    Bajans have been living high off the hog for too long by borrowing other people’s money rather than by dint of hard work in the hot fields of productivity and export.

    It’s now time to pay the financial butcher for all the choicest cuts received on credit or feel the full weight of his carving knife embossed with the initials ‘I.M.F’ (It’s Mia’s Fault).

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  • Miller which now begs the question how many in the tourism sector and other areas of the private sector received those glorious tax write offs from present govt which the taxpayer now has to foot the bill

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  • @Adrian
    “David, I am happy to believe the figures,”

    Adrian this is your first mistake, believing the figures, liers figure and figures lie. GOB has a lenghty reputation for massaging statistics to make themselves look good. You cannot rely on government statistics for making business decisions in Barbados, you have to rely on your personal intelligence and connections for information. Even IMF has stated on numerous occassions that GOB statistics cannot be believed.

    You have to ask yourself why is it that if bookings are UP why are revenues DOWN. No doubt David may have part of the answer, individuals massaging the numbers to make an organization look good.

    Barbados has in the last 50 years, been attempting to give the impression that their FIRST WORLD capable, when in fact they’ve been slowly sinking into the financial abyss. The chickens have now come home to roost, however the roost has been destroyed by greed, corruption and mis-management.

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  • [Barbados Underground] It is now a full month since the new Government imposed the mandatory room levy that our cherished guests have been asked to pay. How effective has the additional tax collection been and will we ever know what sort of overall revenue has been successfully collected

    The answer is No. Not an accurate account will be ever given
    Furthermore as all has noticed this govt has presue a path of self preservation
    Relying on PR stunts and smoke and mirror policies to keep sensible people in the dark
    Also most noteworthy is that in the past many blp supporters would take umbrage in crticizing past govt for taxation.However no more is the case as being shown by the above article and the blp silent voices the article has attracted
    However this i would say that the tourism industry is getting absolutely what they deserve from present govt by way of having to pull their own wagon and helping to pull govt also
    I remember in the early days of this govt when the global melt down had impacted the tourist industry negatively at home and abroad.The loudest calls were heard here on Bu from the blp supporters along with potent and repetitive articles all coming from Loveridge for govt to do “something”
    I also recalled the mounting pressure from the then oppisition leader Mia Mottley and her incessant down right disrespect for govt policies that would have helped the dying tourism industry
    however govt rallied in the industry favour pulling out all the stops in
    advertisement in international media without having to ask the tourism industry to add a dime
    Now to hear and read Loveridge article looking for response from govt as to concerns which the tourist industry and heavy taxation will be burdened is too sweet and is indeed deserving of a belly laugh.

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  • Mariposa,

    It is a known FACT for any person with even a vague understanding of our tourism industry that the private sector has spent more real money on promoting Barbados than ANY Government. Once you extract the operating costs of the BTMI and BTPA up until the recent mini budget this is obvious. Now the sector with the new airline tax and room levy will pay ALL the costs including the administration expenses of these two largely Government agencies. With the 50 per cent increase in water costs we will also largely fund the SSA and BWA.

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  • By all means the Tourism industry should foot the largest amount in the area of commercial advertising
    That should be a given. However not cannot discount or take lighly that at a time when all countries were affected by the global melt whiich hit the tourism industry very hard. Govts throughout the region were financially strapped and
    past govt made a concerted efffort while at some times over looking other areas of the economy in order to keep the Tourism sector alive
    Right now and present bajans are having to foot some of the tourism bills left due or unpaid because of the financial spend in the commercial areas that kept the tourism sector alive during those presssing times
    Loveridge your complaints must not only be measured internally to suffice your needs but a composite of all taxpayers monies directed into the tourism industry over the years that must be recovered in one shape or fashion
    Yes indeed the chickens have finally come home to roost .
    The days of gimme is over and the piper is here to collect its due

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  • I have noticed that Rawdon Adams, the great financial wizard and political sociologist, has defended the fixed exchange rate of the Bajan and Greenback. This after Barbados defaulted on its debt. Maybe he can explain this, with his brain power

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  • Piece Uh De Rock Yeah Right

    @ Adrian Loveridge

    Let me ask you this.

    Suppose Madamoiselle Prime Minister of Barbados Mia Mottley (she who is running 21 of 26 ministries, and overseeing the other 5, were to instruct the Oblong Head Kerrie Simmonds Minister of Tourism to apply the tax only during the Peak Period and to remove it during the off season?

    Would such a strategy have any impact on you guys?

    So suppose she rools this back to December 22 and did a 50% with the Departure Taxes, what do you, a seasoned practitioner think this would result in?

    I mean after all IF THIS MIA CARES ADMINISTRATION is seeking to assist the goose that is laying the golden egg would it not be a reasonable thing to reach out to you gents during this bleak period and do something meaningful?

    You dun know that Oblong Head ent going have no ideas for heself causing he right now looking to get ferries running from St Lucy and East coast road to Bridgetown

    Steupseee

    Like

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