25% GST increase will cripple Hotels and tourism industry

Doug Thompson

It’s among the top foreign exchange earners, but the ripple effect of the global economic meltdown has been taking a toll on the tourism industry. The sentiment among tour guides, hoteliers and other stakeholders is that as much as the numbers may not have decreased significantly, both overnight and cruise tourists are not spending the way they once did.  So what will the twenty-five percent increase in GST mean for the industry? News Five’s Isani Cayetano got the perspective from the industry today. Here is his report.

Isani Cayetano, Reporting

The recent announcement by the Barrow Administration of an increase in General Sales Tax will affect the hospitality industry tremendously.  Doug Thompson, President of the Belize Hotel Association, says that hoteliers are being forced to take on supplementary expenses despite meager profits as a result of the current economic climate.

Doug Thompson, President BHA

“The tourism and hotel industry we are presently operating on very narrow margins because of the downturn in the economy in general and especially in the American economy who we depend on for most of our tourists.  That two and a half percent change in sales tax impacts especially hotels that do packages and the timing of it, the quickness at which it will go into effect will cause many hotels to have to absorb that two and a half percent because they already sold their packages at the present ten percent rate.”

BTIA’s First Vice President Jim Scott says despite the hotel industry not being subjected to GST the overall increase in taxes is an additional weight they will need to shoulder.

Jim Scott, First Vice President, BTIA

Jim Scott

“The hotel sector is exempt with GST meaning that we have to pay GST but we are not allowed to credit the payments we have made for procuring our supplies and capital items and so forth.  So it’s an added burden and of course we have lobbied for several years since GST is about to be zero rated so we would be able to credit those payments that we have made to GST.”

According to Thompson there should have been an exchange of opinions between GOB and stakeholders within the tourism sector prior to a decision being taken on tax increases.

Doug Thompson

“Whenever you impact any industry it would be helpful if you consulted and this way you could make an informed judgment as to whether or not the timing for instance or whether or not it’s even beneficial to try to raise money in that area.  I understand the government has a deficit and needs to fill it but there has to be other ways to do that other than the General Sales Tax which is across the board a real regressive tax for everybody and certainly in this industry we want to pay our fair share, we do pay our fare share however we will not be able to pay anything if we are forced out of business.”

Jim Scott

“The true burden of this tax we often think that it’s the larger hotels that are gonna bear the burden and yes we’re gonna contribute more than the average ones but because we’re in such a tough economic slump right now globally and our tourism product is an international competitive product, it’s the small mom and poppas I think are gonna have the greatest effect.  I think it’s the families out there who are running their operations right now during very tough challenging times are gonna have very tough times meeting their monthly obligations for GST, for business tax, and for hotel tax.”

Scott also concedes that there should have been careful consideration given to the tourism industry prior to the decision taken to increase GST when that sector has been regarded among the highest revenue earners. Reporting for News Five, I am Isani Cayetano.

The tax increase is to take effect on April first and most hoteliers were of the view that there was little time for recommendations on the tax.