Taxes on the tourism industry in Barbados and other Caribbean destinations should not be seen as a bad thing, says St Lucia’s minister of tourism Dominic Fedee.
Responding to questions during the State of the Industry Conference (SOTIC) this week, Fedee said taxes were necessary to help develop the industry.
“Tourism has to play a meaningful role in the national development of the respective jurisdictions,” he said.
“If you look at the Caribbean it is the most tourism dependent region in the world. So, I don’t think that tax is necessarily a bad thing. I think overtaxation is a bad thing but I think that there is a happy medium where government can strike between taxing to ensure that they build an infrastructure that support industries and tourism and at the same time allow tourism to compete,” he explained.
Since the announcement of new taxes on tourism in Barbados, including a $140 Airline Travel and Tourism Development Fee for extra-regional destinations and $70 fee for travel within the Caribbean, there have been criticisms that this could dampen visitor arrivals.
Travellers to St Lucia are also subjected to a sharp increase in travel after that country reintroduced an Airport Development Tax of US$35 ($70) and raised the Airport Departure Tax for foreign visitors from US$25 to US$63 ($50 to $126) a year ago.
Critics have since complained that both Barbados and St Lucia have made it more difficult for travellers, especially families, to visit those Caribbean destinations.
But Fedee told Barbados TODAY it was necessary to put taxes on the industry in order for government to carry out development work on tourism, adding that it was about striking a delicate balance.
“I don’t subscribe to the old notion that every time there is a tax it is necessarily a bad thing,” he said, adding that in the case of St Lucia, its departure taxes were being used for airport upgrade.
Pointing out that Value Added Tax in St Lucia was 15 per cent when introduced and the tourism industry was only paying eight per cent, Fedee said there was some allowance made in many instances.
“But there are some subsectors in the industry, that if you try to raise the fee by $1 it is a big revolution and this attitude needs to stop. We need to see ourselves as players and stakeholders for the sustainable development of the region, not just for our countries as a destination but also for the sustainability of our businesses,” Fedee said. He called on the region to come up with a more cohesive marketing strategy instead of seeking to compete against each other.
“We have to get this regional marketing initiative right. We need to come together and see ourselves as a region. I don’t think we are competing against Barbados or Dominica or Antigua… I think that the bigger competition are the different regions in the world, the different types of vacation,” he said.
Giving an update on St Lucia’s tourism industry, Fedee said the Allan Chastanet administration had taken the decision to embark on strategies to maximize tourism’s contribution to the economy by reinventing the product especially in the areas of marketing, incentive regimes and governance of the sector, even with a “very limited budget”.
“We thought to ourselves that all of those things were underperforming . . . so we transitioned form a Tourist Board to a Tourism Authority,” he said.
“Very often the tourist boards around the Caribbean, when governments fall on hard times like in the case of the economic crisis in 2008, the first budget that gets cut is tourism. So we thought we had to establish an authority and give it not only a lean, mean type regime type of operation but to ensure we have a financing mechanism that will sustain it,” said Fedee.
A similar decision was taken by the Mottley administration when she announced in the June 11 mini-budget that the Barbados Tourism Marketing Inc. (BTMI) and the Barbados Tourism Product Authority (BTPA) would be severed from the Consolidated Fund – the Government’s war chest -to operate under a public/private partnership.
The BTMI and the BTPA are to operate under a single board, Mottley had said.