Government’s latest proposal that would see the local hotel sector getting generous tax relief is not sitting with former Minister of Tourism Noel Lynch, who is suggesting that the move could do more harm than good for the country.
Lynch’s comments come against the backdrop of a statement made by Minister of Tourism Richard Sealy, who confirmed last weekend that a meeting had been held with members of the agricultural and manufacturing sectors in an attempt to iron out their concerns about the move.
Chief among these is the lingering worry that local industry would be further overlooked should hoteliers be given similar tax breaks to those already afforded to Sandals. This is in spite of the Government’s assurances that the agricultural and manufacturing sectors would be given the opportunity to be first in line to supply the local hotel chains.
However, given the dire state of the economy and based on the prevailing economic climate, Lynch told Barbados TODAY the Government simply could not afford to give away concessions at this time.
He said while he agreed the tax burden on hoteliers should be lowered, he did not believe a “willy-nilly” approach would solve the island’s problems.
“We can ill-afford at this time give away concessions and benefits in the way we are giving them away. We don’t only have expenditure problems but we do have some revenue problems as well. Therefore if you are you going to do that how are you going to do that effectively unless there is some certainty over what you are giving away in the industry,” said Lynch.
He said he could understand the fear of players in the manufacturing and agricultural sectors, saying if tax exemptions were given to hoteliers it could lead to greater imports.
“Part of the issue is as you then move to point where a lot of the goods and services are going to be sourced from some external source then you are going to be undercutting and undermining some of the people who produce them in Barbados. It is even worse. If you give food and beverage as an input and you strip away all the input cos,t you know what you are doing to local suppliers,” said Lynch, adding that Barbados had “this piece meal approach to how we deal with tourism development”.
But hotelier Adrian Loveridge has welcomed the proposed tax reliefs for the local hotel industry, saying since the concessions were granted to Sandals the rest of the industry was left “scrambling to try and compete on a completely unlevel playing field”.
“I am all for that. That for me is the most sensible way to look at it. Treat [tourism] as if it is an export,” said Loveridge.
He agreed with players in the agriculture and manufacturing sectors in their plea, however, saying that they should be brought into the equation.
Loveridge said the challenge was getting consistency of products and getting them at an affordable price.
He suggested that a tax incentive could be offered to get local hoteliers using more locally produced items.
“If it is a tax incentive that makes that work, so be it, because you are keeping people employed, they will pay some form of income tax, some form of national insurance and will have some form of discretionary spending even if it is visiting the supermarket once a week. It all goes back to the economy. Once you spend the money outside Barbados it is gone forever,” said Loveridge.
The Barbados Hotel and Tourism Association was not available to comment.