Tourism changes coming
Major changes are coming to the way in which two tourism-related government entities operate and the contribution made by the tourism sector in general to the public purse.
According to Prime Minister Mia Mottley, the measures are intended to save Government millions of dollars going forward. Speaking in the Lower House yesterday as she delivered the much-anticipated Budget, PM Mottley announced plans to, within less than four months, transition the Barbados Tourism Marketing Inc. (BTMI) and Barbados Tourism Product Authority (BTPA) into a public-private partnership. That plan, she disclosed, would save the Government as much as $96 million, an amount currently earmarked for the collective marketing and product development of the local tourism sector.
“The Government of Barbados will accordingly review the Governance arrangements, so as to ensure a transfer of lead responsibility to the private sector for the ownership and management of these entities. It will however still be a partnership because the Government will retain a minority shareholding and a golden share in the interest of ensuring fairness and equity to all players in the sector. It is anticipated that this transition will take place between now and October 1st. In order to facilitate the new institutional arrangements, it is intended to isolate the revenue that will be necessary to manage these institutions in the early years,” she said.
With that in mind, she announced that come October 1, this country will introduce an Airline Travel and Tourism Development fee, to be charged in addition to Departure Tax. Mottley said the fee to be paid by passengers flying outside of CARICOM will be US$70, and for those within CARICOM US$35 and will be placed on tickets purchased after October 1.
“It is anticipated that this measure in a full fiscal year will realise $95 million. $75 million of this amount will go toward the BTMI and BTPA and we are assured by the members of the Social Partnership that this $75 million can allow them to do as good, or better a job, in the marketing of Barbados’ tourism. Similarly, the $20 million remaining will go to Central Government towards the further regulation of our tourism product, civil aviation and our shareholder responsibilities, as a major shareholder, but not majority shareholder in LIAT,” she stated.
While acknowledging that some persons may be wary of this measure and the impact it could have on the sector, Prime Minister Mottley said Barbados would not be the first Caribbean country to introduce a similar tax on persons leaving the country. Using St. Lucia as an example, she said it did not result in a reduction of travel as some had anticipated.
The PM also announced additional taxes on the tourism sector, with the implementation of a room rate levy for an interim period. She spoke to this as she announced Government’s intention to increase Value Added Tax (VAT) on hotel accommodation from 7.5 per cent to 15 per cent by January 2020, allowing visitors to make a “small contribution” to assist in maintaining the country’s infrastructure, including sewage and garbage collection.
“We however accept from the tourism sector that to introduce this without a sufficient lead period will cause harm to our hotel sector, because of them being locked into contractual arrangements.
In our discussions with the Social Partnership, we have agreed that any such rate adjustment should be applicable from January 1, 2020. This will provide more than adequate notice for them to plan and adjust their contractual and marketing efforts accordingly. In the interim, Mr. Speaker, my Government will introduce a Room Levy to be applied to our hotel rooms,” she said.
Mottley announced that “B” Class and Apartments will pay US$2.50 per room per night; “A” Class, US$5.50 per room per night; and Luxury Class, US$10 per room per night, which is expected to earn $47 million for the Treasury. Additionally, she said Government will apply a 2.5 per cent Product Levy on all Direct Tourism Services, which will be collected on Government’s behalf by the providers of these services earning $3.9 million.
The measure, she added, also captures the shared accommodation sector namely Airbnb, Home Away and similar types of accommodation. She explained that the technology now exists for Government to collect Barbados taxes due on these online transactions and so Government will introduce a 10 per cent shared accommodation levy on all fees charged for the shared accommodation and it should garner $8 million. (JRT)