Hoteliers concerned about impending GST and low occupancy
It’s an issue that’s been a hot topic in the business community: taxes and the proposed General Sales Tax set for imposition in April 2006. Today, the tourism industry, by way of the Belize Hotel Association, was the first to publicly broach the subject and its ramifications for investors and visitors.
Janelle Chanona, Reporting
Today, the Belize Hotel Association offered prayers and silence as a remembrance to those who have lost their lives in the last four weeks, incidents that have hit the country?s image hard and brought scrutiny to safety and security standards.
By all accounts, these are rough times for tourism on a whole. But according to the B.H.A., ?things really hard out yah?. They claim Belize has the lowest arrivals of overnight guests in Central America, putting national hotel occupancy at less than half, jeopardising a significant contributor to the national economy and putting the collective investment of approximately three hundred and sixty million dollars by more than five hundred Belizeans in a precarious position.
Maria Otero, President, Belize Hotel Association
?As a sector, we need to convince the key people in Government of the importance of strengthening the overnight sector by increasing hotel occupancy levels in order to be able to keep our product at international standards and therefore, attract new investors.?
Determined to get a handle on the situation, the B.H.A. launched a pre-emptive strike against the next issue that is predicted to have far reaching implications for the tourism industry: taxes. During its annual general meeting this afternoon, Minister of State in the Ministry of Finance, Jose Coye, took the floor to talk GST in the context of the current tax system.
Jose Coye, Minister of State, Ministry of Finance
?We have these many indirect consumption customs duties, revenue replacement duties, environmental tax, excise duties, and it goes on and on and on. There are so many of them. So what we sought to do first in the reform was to look at one of the areas that we see a tremendous amount of this economy?s inefficiencies, waste, loopholes, causing avoidance and evasion of taxes, and we are trying to see how we can bring all those under one pillar, a consumption tax.?
?We are proposing the General Sales Tax, the GST, and if you want, you call it the Goods and Services Tax and if you sure wish, you can call it a God Send Tax. But the bottom line is it in fact a tax that has been proven in the world.?
But this afternoon the GST looked more like a bat out of hell to local hoteliers, who challenged Belmopan?s argument that the industry won?t be doubly taxed.
Jose Coye
?Let me put out to you this way then let?s take the… that hundred dollars that you are pay now, the hotel tax, that has a lot of other taxes in it, the Sales Tax is in it.?
Audience
?That has no tax… No, no, no. The nine percent, that?s it… there?s no cascading taxes on hotel rooms.?
In its initial proposal, the Musa administration has suggested a repeal of the present nine percent hotel tax, which would then be replaced with the GST. However, B.H.A. members maintained that since the hotel tax makes up the majority of the budget of the Belize Tourism Board, its removal would wipe out the sole regulator and marketer of the country?s tourism product.
Jose Coye
?I don?t see quite frankly at this time, I don?t see and I cannot see any negative impacts. I see side benefits coming clearly from the GST itself for the Hotel Association, like it will be for all other economic activities in the country through an overall tax system that is more efficient.?
?The more modern approach to taxation is to broad-base and cross subsidise through the expenditure side. But if one feels they don?t trust a government because it?s not transparent enough, it takes your taxes, put it into a consolidated fund and takes out from it and gives it to who it wants, then that?s a different argument. So it?s not that door I would like to go down to say well fine, your taking away from the hotel tax which goes direct to the B.T.B. and we don?t want that because then what happens you will be taking less to go to the B.T.B. and you will never give back what went into the consolidated fund. But I am saying that any government who behaves that way to say that listen, I don?t want to promote this goose, I don?t want to feed the goose, let me kill it and get the egg, that would be very stupid of us to do.?
Audience Member
?At the end of the day we will probably gonna have to charge our guest more money for room tax and then we?re gonna have less money going for B.T.B.?
Jose Coye
?Yeah, in the beginning that?s what it will be.?
Tracy Taegar-Panton, Director, Belize Tourism Board
?We can?t tell you if the hotel accommodation tax will be reduced to six percent, three percent, four percent. There?s still many unknowns to us. This discussion has just begun and it is really going to be dependent for my layman?s understanding on how much value you place on the marketing of this destination and product development initiatives, because at some point we will have to do a couple of scenarios for large hotels, for small hotels. We attempted to do it for this meeting; however, we were not able to ascertain from your association what were your inputs. What is the value of your inputs for X, Y, and Z so we can actually do it based on real figures. People are very afraid of sharing that information and when you are afraid of doing that it gives us nothing to work with.?
Tonight we understand that the Belize Tourism Industry Association, the B.T.B., and the Belize Hotel Association are in the process of forming a task force to review and analyse the state of the industry in order to propose a way forward.
