Sunday, March 28, 2010
The Belize Times
Barrow’s New Taxes Will Cripple Tourism!!!
Tourism’s Impact Very Important Tourism is by far the single largest industry in Belize, generating just about 600 million Belize Dollars for our economy. It is also responsible for 25 percent of the jobs created, a major source of foreign exchange, of income and tax revenue for the government. It is believed that the tourism industry provides close to 60 percent of the tax revenues for the government. With the importance of tourism being so vital to the socio-economy wellbeing of Belize, we at this newspaper find it unfathomable that the Prime Minister would increase taxes without first consulting with the people and business community, especially one as important as tourism.
Tourism Struggling and Without Direction The cry from industry stakeholders for some time now is that the tourism industry has no direction. The consensus is that the decision makers over at the Ministry of Tourism and at the Belize Tourism Board are out of touch with the realities on the ground. Over the last two years, the industry has been in a downward spiral and the Government has been unable to provide the safety net or the adrenaline the industry so desperately needs. Increasing taxes on an already over-taxed and underincentivized industry is no way to help an ailing sector that consists of primarily small Belizean owned and managed businesses. Instead of providing real incentives to support the tourism stakeholders, the Prime Minister and his experts have decided to saddle the industry with a 25 percent increase in the General Sales Tax, a road permit fee, a sanitation tax, and a sport fishing license just to name a few. These new taxes and fees are in addition to the Hotel Tax, Departure Fee, Business Tax, Tour Operators and Guides License, Border Management Fee, Trade License, Business Registration, Social Security Contribution, Environmental Tax, Revenue Replacement Duty, Property Tax, Vehicle Insurance, and Property Insurance. Something may be missing but you get my gist. Just Too Many Taxes and Fees We know that the Prime Minister does not want to hear this, but the tourism industry is already burdened by too many taxes and fees at the moment and it simply cannot handle any more. The cost of doing business in Belize is just too much for most businesses to generate enough revenues to keep their doors open and more importantly record some level of profits. In fact, if one were to add airfare to the cost of coming or doing business, Belize would be considered one of the most expensive destinations in the region. Simply put, we are pricing ourselves out of the market and we cannot continue to operate in this manner. Take a look on the internet and you will find many businesses for sale or that have been closed down. The numbers are very alarming and it is expected to get worse this year. These new taxes are also untimely since the tourism industry is still reeling from a decline in arrivals, an increase in crime, and a decrease in overall consumer spending. What the Prime Minister should be doing is reducing taxes, increasing incentives, and creating an atmosphere conducive for doing business. It is unusual for a government to raise taxes in a country that is in a
recession and headed for a depression. In fact it is just downright stupid. And it is not just this newspaper saying this! Key representatives from the two leading tourism associations in Belize, the Belize Tourism Industry Association and the Belize Hotel Association have publicly denounced the government’s increase in taxes. Another important issue that the Prime Minister has completely overlooked is that many businesses are in contracts that do not include a 25 percent increase in taxes. What that means is that our tourism stakeholders will have to assume this additional burden. From what we have gathered, the cruise lines have already made it known that they will not tamper with the prices for their tour packages. If the Prime Minister and his financial gurus had only consulted a little, they would have been informed of this. What happened to consultation and transparency Mr. Prime Minister? You are indeed bogus!!! Who will be impacted the most? Obviously this UDP Government does not understand the make-up or dynamics of the tourism industry in Belize, so I will try to help them. There are over 600 hotels in Belize, and of that total 90 percent of them are considered small. Similarly, there are well over 200 tour operators, and except for a handful all are considered small. There are also many small mom and pop restaurants that feed both international and Belizean patrons. Other businesses include, gift
shops, massage parlors, boutiques, real estate agents and private and public destinations just to name a few. Belize provides a unique experience with the largest property having only 160 rooms. There are properties around the globe that have almost as many rooms as the entire country of Belize. Our size is one of the attributes that makes us special but it can also be problematic from a business standpoint. Unlike bigger, more profitable operations that have the cash flow or ability to access capital, the smaller businesses will be the ones most
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affected. As mentioned before, many of these businesses are struggling to keep their doors open and to burden them with more taxes is just unconscionable. If taxes were being raised to better the tourism product stakeholders would not mind. Remember when Mayor Moya was willing to shut down the cruise industry to get a portion of the Head Tax. Back then she said it would go to improve the infrastructure in Belize City however, four years later most of Belize City is in a decrepit state and they cannot even pick up the garbage. We would like to advise the Prime Minister and his government that taxation without representation is like highway robbery. This might sound “clicheish” but tourism in Belize is at a crossroads and the decision makers led by the “light pints” and racist Minister of Tourism are struggling to decide which direction to head. It has been over two years now and all this government has done for tourism is claim fame for a tourism project negotiated by the People United Party. For Belize’s sake we really hope that they get it right sometime soon, the country depends on a vibrant tourism industry to better our lives.