Yesterday, 7News showed you the Belize Hotel Association's reaction to the proposed removal of the 9% hotel tax to the standard 12.5% GST that everyone else pays.
The BHA president's comments were measured because, while it is what the hotel industry asked for 8 years ago, the full details and implications are not clear at this stage.
Today, we spoke to Jim Scott, president of the Belize Tourism Industry Association, who gave us a more detailed response on the stakeholders' ideas and concerns are about the proposed change.
Here's how he explained the BTIA's position:
Jim Scott - President, BTIA
"The fact are that the Ministry of Finance, the Government of Belize, and the Ministry of Tourism had informed private sector that there were going to be some changes in the taxes, and that they welcomed the idea that we work together to try and work out some of the details of the tax. So, the intentions that we know of are that we will be going to the GST system. That obviously will help the hoteliers because there have been numerous reports done that showed that there was an unnatural burden of taxation on the hotel section of tourism. So, what we're doing now is trying to look at the details of the implementation of that tax, working collectively - BHA, BTIA, BTB - so that jointly, we can make a statement as to how we would hope that the tax would be levied, and making sure that there are no exclusions, special items within the tax, or that sort of thing. The big issue for us right now is the fact that we're exempted, and although we pay GST now on goods, improvements or whatever, we are not allowed or able to claim those inputs. So, that's probably the biggest issue now, but we really appreciate, and we welcome the idea that we've been notified, and that they're welcoming our comments and position for the implementation part of a new tax system."
And while, the reactions are positive at this stage, a growing concern is directed towards what it will mean for room rates moving from 9% to 12.5% taxes.
When we asked Scott about this new tax regime spilling over and causing hotel room rates to go up, he told us that the 2 things are not directly proportional.
Here's how he explained the relationship:
Jim Scott - President, BTIA
"If you analyze it, and don't think that we don't look at it - we do look at it - if you look at our region, or the circumference of our region - Guatemala, Mexico, Cancun, New Orleans - which is a big tourist destination - the Bahamas, Jamaica - we're actually currently in the lower tax end of that. So, even to go up to 12.5%, which is proposed right now, I think that we will still be in the competitive set, where taxation is concerned. But, when we talk about cost for our visitors and us, as Belizeans, we are looking at a different game because our cost of electricity; our cost of telephone is high - even though they have gone down somewhat. Our cost for labor, regionally, is high, so outside of that, our cost for the Belizean package, yes, is high."
So, the hotel sector is happy - after years of being sales tax exempt - that it will be able to claim tax returns from GST.
With those returns, they will be able to make much needed extension, renovations and other improvements to the properties that hoteliers saw necessary, but couldn't afford before. Now, it'll be 12.5% cheaper, sicne they can claim back the GST.
Still, it is far more complex and nuanced, and the many, multi-faceted considerations will have to be put to government in meetings what will preceded implementation in January of 2013.
