A senior tourism official has likened a recommendation to raise the cruise head tax and airport exit fees to attempting “some kind of a Hail Mary solution” to the island’s economic problems.
Even worse, warned Chairman of the Barbados Hotel and Tourism Association (BHTA) Roseanne Myers, such a “grab at taxes” had the potential to “kill the very industry” on which Government was depending to attract desperately needed foreign exchange.
“[The authorities are seeking] one solution to solve all our problems as some kind of a Hail Mary solution,” Myers told a BHTA news conference Wednesday at the Bayfield House hotel in Mullins, St Peter.
“You don’t want to grab at taxes to the point where you kill the very industry that you hope to get you out of the recession. No one is suggesting that over the longer term you may not need to look at . . . your full taxation base, but you really can’t grab short term and kill the industry by increasing the cost, having not put fully in place the things we needed to do to address the cost of doing business in Barbados. You would be really ill advised to do that,” she warned.
The Foreign Exchange Working Group of the Social Partnership, mandated by Prime Minister Freundel Stuart on March 3 to present recommendations on how to improve foreign exchange reserves which have fallen to dangerously low levels, has suggested a rise in the head tax, which currently stands and US$6 and the airport departure tax of US$30.
The committee did not recommend a figure for either, and the recommendations, along with others that include a lowering of the Value Added Tax (VAT) with no exemptions, concessions or zero ratings, are under consideration by the Stuart administration as Minister of Finance Chris Sinckler prepares to deliver the Budget before the end of next month.
However, Sinckler has already poured cold water on recommendation to raise the air and cruise taxes, and has said there was no guarantee that he would accept any of the recommendations, which economist Jeremy Stephen has already described as “piecemeal”.
Myers said while “we can’t run” from the fact that the country was in economic trouble, the solution lay beyond shoring up the reserves, or merely raising revenue.
“The earning of the foreign exchange to a greater level than we are today is not going to help us with our debt. The issue that Barbados has right now is the deficit driven by the debt that has increased over the years . . . So you need some economic policy decisions to be taken to be able to address that,” the BHTA chairman said.
She insisted that while reviewing the taxation regime and incentives in order to achieve growth, Government should undertake short, medium, and long-term measures instead of looking for a “short-term knee-jerk reaction that kills you in the medium and long term”.
“So I would say that we need to look at a number of regimes and we need to look at a number of strategies and we need to recognize that over a period of time we can play with a lot of the different things that have been recommended, but with the uncertainty every day in the markets that we are taking business from, are you going to add to it? You really shouldn’t add to it, you really should ensure that you keep Barbados as competitive as we are today and hope that we don’t slip any further; and that really in and of itself is a challenge with the current regime.
“One of the things you cannot assume is that the tourism revenue you are getting today you can depend that you are going to get tomorrow. You have to continue to work to get that revenue in. Are you going to, at this stage, do anything to compromise your ability to earn tourism revenue? It wouldn’t be wise,” she said.
Earlier this week, hotelier Adrian Loveridge has issued a stern warning to Government that any increase in the airport departure tax would hurt, not help, the country.
“Our departure tax is already one of the highest in the region, we already levy VAT on air travel, so we are already an expensive destination to get to and leave from, so that certainly would not be on my list for sure,” he said.
However, he had no difficulty raising the cruise tax, arguing that “cruise ship companies contribute very little in terms of land-based tourism to the economy”.