JAMAICA OBSERVER – THE Jamaica Hotel and Tourist Association (JHTA) is fuming at the levels of increases in property taxes being imposed on hotels, and has called on stakeholders to withhold payments until there is consultation with the Government.
Minister of Finance Audley Shaw announced in the 2017/18 Budget Debate in the House of Representatives on March 9 that a new property tax regime will take effect on April 1, when property tax liabilities will be based on the adoption of the 2013 valuation roll.
“A valuation was done in 2013 and property taxes have not been adjusted since then to take account of that valuation. The last adjustment that was done took into account the 2002 valuations. The 2013 valuation is what we are working on,” he explained.
Additional revenues from the adjustment in property tax rates are expected to yield another $3.93 billion for the Government, in addition to its $13.5 billion revenue package. Shaw stressed last week that the revenue from property taxes should not be lumped with the general revenue package, as property taxes go towards fulfilling Government’s obligations at the local government level.
According to the JHTA, hotels across the island are being asked to pay as much as 980 per cent in increases.
“We think that’s ludicrous, it is gouging …and what is unfathomable about it is that there has been no dialogue. Nobody knows the computation of these formulae that were used to calculate them. We need to know how it is computed. I’m appealing to all members of the hotel association, all tourism operators, do not pay this tax until we can have some consultation. We want them to at least explain to us how they are justifying the increase. The range of increase is far too varied,” Omar Robinson, president of the JHTA, insisted at a press conference held by the association at its headquarters in Kingston on Friday.
“Our operating costs are increasing. We can’t go to our tour operators and increase our rates. We set rates a year or two in advance and most of the time, even the rates that we have agreed on, based on what is happening in the industry, we can’t even get those rates – we have to go back and discount,” Robinson lamented. He urged the Government to improve its efficiencies by removing bureaucracy in order to earn more.
The association has also taken issue with the additional increases in the special consumption tax (SCT) on alcohol, reminding that the industry had agreed to support the Government’s initiative of one national SCT rate on alcohol, having had its previous preferential SCT eroded.
Robinson also warned that the sector expected a sharp increase in electricity bills as a result of the increase in the SCT on fuel.
“These increases will be done via the fuel factor on the bills, which doesn’t need the approval of the OUR (Office of Utilities Regulation). The effect of the gas tax and increased vehicle-licensing fees will negatively impact our transportation providers,” the JHTA head argued. He noted that transportation operators have already negotiated contracts up to 2018 with tour operators, with no room for adjustments.
The JHTA is also upset about the Government’s plans to divert funds from the tax on airline tickets originating outside of Jamaica and cruise passenger arrivals, intended for the Tourism Enhancement Fund, to central government.
There are fears that the funds will not readily available for the sector.
“We all know that once funds go into the Consolidated Fund, it will be used for other purposes. We are very concerned and disappointed that, as important stakeholders, we were not part of any consultation with Government on the proposed changes. We strongly oppose any co-mingling of this fund into the Consolidated Fund,” Robinson stated.
The JHTA has written a stern letter to the finance minister requesting a meeting on the matter, making it clear that, “The JHTA cannot stand by and see this important fund dismantled by what seems to be an ill-conceived intent to garnish funds for use in areas that will not be for the growth and benefit of the tourism industry.”