Minister of Tourism Kerrie Symmonds has said an emphatic “no” to the International Air Transport Association’s (IATA) demand that Government reconsiders the suite of taxes imposed on the travel sector.
Without making direct reference to the global trade association that represents 290 carriers, or other critics of the taxes such as the Caribbean Hotel and Tourism Association (CHTA), who have warned of severe consequences if the levies remain, Symmonds today said the Mia Mottley-led administration had no choice but to impose these taxes to help drag the economy from the brink.
The minister acknowledged that there would be some price increases as a result of the measures announced in the $1.2 billion austerity Budget, but he assured that Government was not being “financially hostile” to visitors.
“Yes, there will be an increase in price points because of the very difficult circumstances that we find ourselves in as a country. That is not done by this Government in an effort to be financially hostile to those people who come to our shores [and] that is not done in order to [skim the] cream off of the top. That is done because we have no choice but to do everything possible to rescue brand Barbados and to rebuild brand Barbados,” Symmonds told the official opening ceremony of a new and improved welcome booth just outside the arrivals halls at Grantley Adams International Airport.
“Though we wish there were people who were constantly minding the shop and not allowing us to come to this stage, we have come to this stage, but we got to fix it. And we have to face it and get it right. And yes, there will be some increases in price points,” he stressed.
It was in her June 11 mini Budget that Mottley, who is also the country’s Minister of Finance, announced that effective July 1, there would be a 2.5 per cent product development levy on direct tourism services, and a levy on hotel rooms at a rate of US$2.50, US$5.50 or US$10 depending on the room classification.
But of greater concern to IATA and the CHTA is the Airline Travel and Tourism Development tax of US$70 for trips to extra-regional destinations and US$35 for travel within the Caribbean, effective October 1.
Speaking Friday on the sidelines of a Caribbean Aviation Day conference at Hilton Barbados Resort, IATA’s Regional Vice President Peter Cerdá told journalists his association had written to Government requesting that it rolls back the taxes, and it was looking forward to meeting with the Barbados Labour Party administration to point out the dangers associated with the increased fees and charges.
Cerdá had also sent a chilling warning to Mottley that “when you impose these fees they have a negative effect”.
“We have seen it in other parts of the world when these fee structures are put in place and are high, first passenger travel begins to diminish and airlines begin to exit the market. That is something we certainly don’t want to happen in this part of the world,” he said.
The CHTA also joined in with its own warning at the weekend, as it urged regional governments to carefully consider the impact of high travel taxes on demand.
Chief Executive Officer Frank Comito, who participated in Friday’s aviation conference, did not name Barbados in his press release, but left no doubt that he was referring to the Mottley administration.
“We recognize the challenges facing countries, but it is our duty to point out that taxing for additional revenue may have a reverse effect as tourists may choose not to travel to or within the Caribbean and instead select other destinations because of the high costs of our destinations,” Comito warned, while stressing that as a result of high aviation taxes governments would take in less in tax revenues and local businesses would likely suffer.
“High upfront taxes also typically adversely affect on-island spending by visitors who do come. They will either opt for shorter stays or spend less on activities, restaurants and attractions to offset the additional cost,” he reasoned, as he recalled Barbados leading a lobby against the increase in the restrictive Air Passenger Duty on trips from the United Kingdom in 2010, which was later modified.
International accounting firm Ernst & Young had also warned that additional taxes on the tourism sector could reduce Barbados’ competitiveness as a tourist destination.
The firm explained that while the measures would generate additional revenue, they could also have the adverse effect of dampening travel as price sensitive tourists may select cheaper destinations.
However, Symmonds insisted today that Barbados had always been more expensive than other Caribbean destination, but he was confident that visitors would continue to come as long as they kept getting value for money.
“I believe, and my staff believe, if we can offer the best possible value for money then the Barbadian experience will be unforgettable and be worth it,” he said.
“And in spite of the fact that it might be slightly more expensive, as indeed it has always been compared to the rest of the Caribbean, once it is value for money, once people feel they are welcomed and they are warmly regarded and respected and well treated they will keep coming back to this place, ,” Symmonds added.