Regional tourism officials say higher travel taxes and duties imposed in overseas source markets are already affecting the industry and now point to moves by Jamaica and Antigua and Barbuda to introduce new travel taxes.
The Jamaica government recently announced that an agreement had been reached with the Jamaica Hotel and Tourist Association (JHTA) on tax measures to be imposed on the tourism sector under the 2012-2013 budget.
Under the accord, visitors to Jamaica will now have to pay a US$20 fee from August 1, 2012 and hoteliers will from September 1, pay a one US dollar accommodation tax for each occupied room for properties with less than 51 rooms, increasing to two US dollars for hotels with 51-100 rooms, and four US dollars for properties with more than 101 room.
Antigua and Barbuda government recently tabled the Airport Administration Charge Act, 2012, which increases airport taxes from US$63.75 to US$93.75. The new fees will be included as part of the ticket fees.
The International Air Transport Association (IATA) has opposed the new measure and wrote Civil Aviation and Culture Minister John Maginley indicating that the new taxes were higher than the average in the region and also could place airlines servicing the island in jeopardy.
IATA Assistant Director of Government & Infrastructure Affairs Cyriel Kronenburg, said “plans for yet another major increase in costs to passengers will seriously damage the ability of airlines serving Antigua & Barbuda to operate in a profitable manner, and will surpass any revenue growth for the airport and will damage the health of Antigua & Barbuda’s economy and tourism sector.”
But Jamaica and Antigua and Barbuda remain undeterred and in the case of St. John’s, Prime Minister Baldwin Spencer described the new tax as reasonable and fair while brushing aside suggestions that the move would bring irrevocable harm to the country’s tourism industry.
“Even if it does initially, that is not going to be sustained over time. There might be an initial reaction but Antigua & Barbuda is a destination that sells itself,” Spencer said.
Jamaica’s Minister of Tourism and Entertainment, Dr Wykeham McNeill, has also staunchly defended his government’s new tax measure.
However former JHTA president Wayne Cummings in a paper entitled “Does Jamaica Want Tourism” argues strongly against the new tax measures. He says Jamaica should develop strategies to deal with its economic problems and also stop relying on the largess of other countries and on the “unending” borrowing from financial institutions s and the capital markets.
“There is little doubt that the economic situation in which Jamaica now finds itself—consuming more than we produce– is one that all well thinking Jamaicans must be concerned about.
“We are now at the point where our creditors are forcing us to instill fiscal discipline, before they contemplate returning us to a sustainable and necessary borrowing relationship.
“But even more importantly one that demands moderation in our spending and hopefully a plan to improve rather than worsen of fiscal accounts, as has been our history,” Cummings noted.
He said that critical to a good economic plan must be an enlightened approach to what the country’s competitive advantages are as it relates to its earnings.
“It must be our plan to grow our way out of our economic woes rather than live on the largess of other countries and on the unending borrowing from both the multilaterals and the capital markets,” Cummings said, adding that the tourism industry now faces a situation where almost every government is racing to apply taxes on anything it can find.
“Truth be told there are only two things that can be done with taxes, pass it on to your customers or absorb it as an expense to the business.
“Both of these considerations have been employed by the sector and the push back from our customers and the ever increasing losses being realized is making both of these an unviable measure going forward,” the former JHTA president said.
He said government must continue to position Jamaica as the best place to invest and not be short sighted by removing incentives and drive investors to competitor destinations.
“Our visitors are far too sophisticated and informed to blindly travel to a destination that becomes stale and dated because we are not mature enough to understand that we must induce investors spend at all levels of the value chain, of which one of the most critical is in the capital product such as buildings and attractions.”
CMC/es/ir/2012