Cummings

WESTERN BUREAU:

Having missed its August 1 implementation date, the Government yesterday backed away from plans to introduce a number of new tax measures on stakeholders in the tourist industry.

The island's hoteliers left their emergency press conference in Kingston yesterday somewhat victorious after the proposed general consumption tax (GCT) on overseas services would be reviewed and the tax on gratuity for hotel worker pushed back until the next fiscal year, April 2010.

"Tax on overseas services would have crippled us," president of the Jamaica Hotel and Tourist Association (JHTA), Wayne Cummings, told The Gleaner.

He estimated that local hoteliers spend about US$60 million on marketing the country overseas, 85 per cent more than the Government forks out to promote the island.

Calling the idea to try to collect tax from the people or companies the sector does business with overseas "miscalculated and misguided", Cummings said although details were yet to be worked out, "We wish to indicate that our members (including hotels and villas, attractions, destination-management companies and car-rental operations) are not in a position to incur any additional expenses if our already fragile viability is to be maintained."

He added: "Neither are we in a position to bear any further cash-flow pressures."

In the case of the hotel-worker gratuity scheme, which proposes to raise the national tax-free threshold from $220,000 to $320,000 (July 1, 2009) and to $440,000 (January 1, 2010), the JHTA president said any reduction in gratuities would affect the lowest paid categories of workers most negatively.

However, Tourism Minister Edmund Bartlett said that threshold would remain until April next year when the new regime comes into being.

The JHTA was also happy the Golding administration has extended the 4.5 per cent GCT, which was applicable to the sector for the last six months, until the end of September.

Yesterday's moves were an obvious shot in the arm for the sector, but a great loss in revenue for the Government, as the stimulus package for the first six months of the year has cost the administration some US$2 billion, and will cost somewhere in the region of US$4 billion for a full year, Bartlett revealed.

Out of their many concerns, the tourism stakeholders were left with only one immediate hurdle and that is related to the tax on allowances on accommodation, which the Government seems unlikely to bend on.

"On the issue of housing allowance, that we cannot do anything about," the tourism minister said. "It's a fair position that the Government has taken in this regard."

He added that given the state of the economy and the fact that revenues have fallen significantly over the period, "We must recognise too that all of us have to put our shoulders to the wheel and bear some of the burdens and understand the recalibration that has to take place."

janet.silvera@gleanerjm.com