The Adrian Loveridge Column – Tourism Expenditure Under he Microscope
The January-December Stayover Expenditure 2018 Report makes very interesting reading, but it does raise a number of unexplained questions.
It is now well over six months since Government introduced a bevy of new tourism taxes on 1st October 2018, including the Airline Travel and Tourism Development Fee (ATTDF) or second departure tax, Room Rate Levy, DTS Product Levy and Shared Accommodation Levy.
In the interest of absolute transparency and securing the undoubting unilateral support of the tourism sector, it was hoped that the administration would have published the figures, to illustrate without question, what additional revenue, the latest taxes have generated.
Without these statistics, it is almost impossible to intelligently compare like-for-like over the last two years.
What also needs clarity is whether the Airline Travel and Tourism Development Fee element is included in the average visitor spend figure? Especially as it forms a legitimate integral component part of the overall holiday cost even though it is ‘hidden’ in the airline ticket cost.
According to published data, Barbados welcomed around 680,000 visitors by air in 2018. Average that out through the three months from1st October until 31st December and that could be 170,000 passengers (bearing in mind December is one our busiest months).
Assuming 80 per cent are paying the higher level of ATTDF at US$70 per person and 20 per cent US$35 at the intra-Caribbean level, that’s a staggering BDS$21 million alone, before you even consider the other imposed taxes.
It is also difficult to understand why Government has chosen to ignore the cruise passenger sector yet again, despite the stated economic crisis situation?
While VAT at 17.5 per cent is levied on all outbound airfares it is not on cruise ship passengers who depart from Bridgetown Port.
Particular mention has been made of a quoted $50 million (BDS$ or US$ was not specified) that could be collected on online purchases, like hotels, villas and car rentals annually, where VAT is due for goods and services that are provided on Barbados.
The $50 million figure is especially puzzling, as 25% of this figure could be payable by a single two property hotel operator alone, annually in VAT contributions on the due accommodation/food and beverage element.
If they are exempted through previously arranged tax concessions, where is the equity and fairness in that?
Of course, if VAT is payable, it should be accounted for and paid, but perhaps part of the reluctance to comply has been created by the inability or unwillingness by Government to repay long due VAT refunds to those entities, who have already fully complied previously.
While 2018 generally shows an encouraging increase in average spend on many areas over 2017, there are some disturbing contradictions.
Visitors spend is down on souvenirs (-5.3%), transportation (-3.3%) and perhaps most concerning, entertainment/recreation (-1.2%).
While in the last case the percentage decline is small, when you factor- in the new DTS 2.5 per cent Product Levy payable for three or the twelve month period, then the gap is substantially increased.
Perhaps this sub-sector needs some additional attention?