Stabbing the tourism industry in the back

Sunday, May 27, 2012

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IF fish come from the bottom of the sea and warn that sharks are down there, what should you do? You had better listen!


Clearly, the Government has decided not to heed the dire warnings from the tourism industry that it has been gutted beyond reason and has now reached tipping point.


Don't take our word for it, ask hotelier Mr John Issa why he is getting rid of or about to get rid of his Breezes Runaway Bay and Montego Bay hotels, Hedonism Runaway Bay, and Trelawny Beach in Jamaica, along with hotels in Panama, Curacao and even in Brazil.


Mr Issa is not faint of heart and has served this country long and well, but now appears to be victim of the lack of competitiveness in the industry.


Ask other hoteliers from one corner of the Caribbean to the next why they are in such dire straits.


Or perhaps the Administration prefers to wait until Jamaicans can't get even the US$500 travel concession from banks, as it was in the 1970s, to where we now seem to be rapidly regressing as a country.


Every Government foolishly believes that somehow the tourism industry can always take a little more and can withstand a recession where no other industry can. This time, Dr Peter Phillips and his Government have taken this illogic where no one has gone before.


The numbers are indeed gut-wrenching. It is not only that they have introduced the room tax of between US$2 and US$12 per room on top of the existing 10 per cent General Consumption Tax on hotels. Add to that the enormous tax on alcohol and farm produce, both of which are major consumption items for the industry.


This represents a total wipeout of the gains that have kept the hotels operating as Jamaica worked through the recession.


All these costs will have to be passed on to the tourist, who will quickly calculate that Jamaica is far too expensive a place to take his/her hard-earned vacation. If the tourists do not come, the jobs and the foreign exchange will go.


But it's worse, because the removal of waivers that saved many hotels will severely jeopardise the critical modernisation and refurbishing of many hotel properties.


And yet the unkindest cut of all is that the Government has sold out the local land-based industry in favour of the cruise shipping industry which is bearing none of the burden. Instead, the tax paid by the hotels is being used to subsidise things like fresh water, beach garbage collection and other services offered to the cruise ships which have famously refused to pay the US$2 head tax.


The Government has chosen to ravage the tourism industry instead of doing the hard work of running down the tax dodgers. An estimated 80 per cent of company taxes and 50 per cent of property taxes are not being paid to the Government. It is estimated that 250,000 persons who should be paying income tax are not doing so.


If the Government has selected to pillage the industry, what can one say of the Private Sector Organisation of Jamaica (PSOJ)? After months of public relations gimmickry, it clearly has provided no representation for the one industry that has kept the economy going.


Not that we are surprised, because it was said earlier that the PSOJ tax reform committee was bereft of anyone with significant export experience and could not do justice to the sector.


This Budget is nothing short of a cruel knife in the back of the industry which responded to the need to invest in the country when everyone else was retreating and laying off workers.


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