Hotel Assoc. Takes Wait & See Approach On Hotel Tax/Sales Tax Changeover
In his budget speech on Friday, the Prime Minister announced government's plan to move away from the Hotel Tax - and shift the entire hotel sector over to the standard 12.5% GST that everyone else pays. The new tax regime would not come into effect until January first of 2013, but there will have to be consultations between government and the private sector.
And to firm up the private sector's position, the BTIA and the Belize Hotel Association met this afternoon.
We spoke with President of the BHA, Doug Thompson at his Black Orchid Resort in Burrell Boom after the meeting - and here's what he had to say about the way forward:..
Daniel Ortiz
"You had a meeting with the representatives of the BTB and the BTIA. Am I correct?"
Doug Thompson, President - BHA
"Not the BTB, not today, I met with them earlier, actually last week but not today."
Daniel Ortiz
"So who did you meet with today?"
Doug Thompson, President - BHA
"Just a group from the BTIA and the BHA."
Daniel Ortiz
"What was discussed?"
Doug Thompson, President - BHA
"As you know the Prime Minister proposed a change in the tax regime as far as it relates to hotels and in particular the 9% tax that hotels presently collect to convert it to the GST system that everybody else is under."
Daniel Ortiz
"What is the implication of this sir?"
Doug Thompson, President - BHA
"We can't be sure yet. It could be positive; there is no reason to think that it will not be. The Prime Minister clearly stated that one of the purposes for switching to the GST is to incent growth in the industry. We are a growing country; the industry is growing tremendously and the tax if handle properly can be an incentive to hoteliers to expand and to improve their facilities."
Daniel Ortiz
"Sir, in short the hotel association supports the tax regime?"
Doug Thompson, President - BHA
"I can't say that at this time, we are still in the process of negotiating. We are not quite clear as to what it is or how the new system is going to work. If it works as we believe it will or it should then yeah we could support it but we need to know more. We will be meeting with the BTB later this week and after that then we will have a better sense of where we are."
Daniel Ortiz
"But sir, isn't this what the BHA been asking for since 2004?"
Doug Thompson, President - BHA
"We did ask for a similar regime. It was rejected back then. It seems like it will be applicable the way we envisioned it this time around but we don't know that yet until we get a firm grip from GOB as to which way it would be applied. I am not in a position to say definitely it's what we are looking for but the potential is definitely there and we do believe that it's going in the right direction."
Daniel Ortiz
"Will this make room rates higher moving from 9% to 12%?"
Doug Thompson, President - BHA
"Yes the tax rate would go up but it would still be competitive with the industry in the neighborhood in the Caribbean and in Central America. So it's not overwhelming in any way."
Daniel Ortiz
"Can Belize afford any spike in room rates?"
Doug Thompson, President - BHA
"I wouldn't look at it as spike in rooms rates and it's up to the hoteliers, clearly they have to collect the 12.5% but in fact in a growing economy and ours should be growing and certainly this industry will be growing, I think that we will be fine, we do just fine."
And while that's how the private sector feels, the institution that stands to be the most significantly affected is the Belize Tourism Board. Presently the BTB collects all those hotel taxes - and it is the only tax that does not go into consolidated revenue. Those taxes - upwards of 10 million a year - then go right back into marketing and product development.
Under the new regime, BTB would not collect any revenue. Government - as it does with all GST receipts - would make all collections then put in place a mechanism to transfer a portion of the revenue collected from the GST to the BTB - presumably a figure equivalent to the present hotel tax receipts.
Sounds good on paper, but the details of working this out are expected to be devilish.
Channel 7
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