Struggling Bahamas Hoteliers Demand Tax Relief

by Robert Lee, Tax-News.com, London

13 December 2001

CARICOM heads of government met last weekend in The Bahamas for a Tourism Summit to discuss solutions for the Caribbean's tourist industry which has suffered significantly since the 11 September terrorist attacks in the US. CARICOM has stated that the industry's importance to the Caribbean cannot be over-emphasised as it contributes 25 per cent of the region's gross domestic product.

During the summit, Bahamas hoteliers took the opportunity to step up their demands for tax relief. According to a report from The Bahama Journal, Jean Holder, secretary general of the Caribbean Tourism Organisation said: 'An unprofitable industry is not sustainable and if tourism is the prop of our economies, not only is it very bad news for our private entrepreneurs, but it must be of deep concern to Prime Ministers and Ministers of Finance.'

'These matters have serious implications for government policy. It becomes a matter not about if the private sector is taxed, but how it is taxed,' he added.

Ed Fields, Atlantis Vice President of Public Affairs, claimed that operators are aware that the cost of doing business in the Bahamas in tourism and other sectors is expensive compared to other areas. 'We must come to grips with the fact that other destinations such as those in Mexico and other parts of the Caribbean have significantly lower labour, utility and operational costs,' he said.

Robert Sands, general manager of the Nassau Marriott Resort and Crystal Palace Casino, told the Bahama Journal that the hotel sector is forced to pay taxes that many other businesses are exempt from. He explained: 'There is no other business in this country that pays a room tax or a sales tax of any type other than the hotel business. We pay approximately six percent room tax to government on our room sales.'

Mr Sands added that casino taxes, high duty and stamp taxes on certain goods, excessive work permits for expats in specialized hotel fields and high alcohol taxes have reduced profits considerably. 'There is no question in my mind from a tax burden view point (that) the hotel sector is carrying the lion's share of the tax burden where businesses are concerned within the country. We don't want always to be the segment that tends to be burdened with the increases. We would look forward to relief from some of these taxes sometime,' he said.

Tourism promotion, market development and air transportation were identified as major issues for discussion by the Summit. The re-engineering of the Caribbean tourism product was also discussed with particular focus on cost, quality and diversity of the product and service levels which were identified as critical factors for the sustainability of the tourist industry.

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