Adrian Loveridge Column – Tax, Tax and VAT Refunds?
By now I would have hoped in the interest of transparency, our Government would have published a full disclosure of the ‘windfall’ funds raised by the imposition of the bevy of new tourism taxes applied in October last year.
These include the Airline Travel and Tourism Development Fee (second airport departure tax), Hotel Room Levy, Direct Services Product Levy and Shared Accommodation Levy.
Why are these figures so important and why do ‘we’ need to know?
First, we have to be reminded that the stated objective of increasing the cost of each holiday to Barbados for our visitors was to assist the new administration in helping balance the nation’s books and to take fiscal responsibility off the Ministry of Tourism for funding the Barbados Tourism Marketing Inc., and Barbados Tourism Product Authority at a quoted annual cost of around BDS$100 million.
Having achieved that at a stroke, monies then became available, within a solitary year – funded by our arrivals – to look at creative ways for increasing airlift.
Following the demise of Thomas Cook Group, including its airline, our planners and policymakers were quick to persuade, at a cost, Virgin to increase capacity from Manchester and Gatwick, soaking up the shortfall, and in fact, making even more seats available.
Another example is the Lufthansa Group subsidiary and it’s three flights a week from Frankfurt. Not only adding capacity from German’s largest cities with just a short train ride and a single nonstop flight to Barbados with an additional approximately 1,000 seats a week, but further opening up Continental Europe’s connecting cities, at some of the lowest long haul fares to the Caribbean on the market.
Our European visitors tend to spend longer at the destination, making them more attractive to our accommodation options and often hiring cars, visiting attractions, activities and a myriad of eating establishments.
The Hotel Room Levy is another cost, not paid by the property involved, but by the guest, so ‘we’ need to know, if this has in any way negatively affected annual room occupancy, previously quoted at around 67 per cent per year and overall net room rate.
Thirdly, again the Direct Tourism Services Product Levy is paid for not by the tourism partner, but by our visitors. Has this relatively small additional tax, impacted on car hire rental or all the various services on offer?
Lastly, has the Shared Accommodation Levy, at last helped ‘us’ identify the hundred’s, but more likely thousands, of unregistered and therefore unlicensed alternative lodging options? If so, perhaps this has finally brought them into the fiscal contributing loop, in terms of VAT (Value Added Tax) avoidance and foreign payment evasion.
We are now also just a month away from the declared increase of the VAT rate on those accommodation partners already contributing, which will further push up the price of our tourism product in a market that has long been questioning the value-for-money they currently receive.
This at a time when many businesses, including hotels that are still waiting for agreed and overdue VAT refunds, which in some cases are over 6 years outstanding. This hardly appears to be a model for encouraging new tourism investment or driving investor confidence.