ATTENTION will turn this Wednesday to a crucial meeting between the finance ministry and anxious tourism leaders fearing that a General Consumption Tax (GCT) increase being proposed for the sector will badly hurt its viability for the immediate future. Nervously awaiting the outcome of the discussions also are sectors like domestic agriculture and manufacturing — broken down into produce, poultry, dairy, juices, sauces, water, electricity, packaging, furniture, uniforms, amenities, and transport and services, for which tourism is the anchor customer. The tourism industry and its spin-off entities have been fretful in recent years over its future profitability after a series of financial shocks, mostly stemming from natural weather events, left the sector reeling.
Sector leaders interviewed by the Jamaica Observer for this story said Hurricane Melissa caused more than US$8 billion in physical damage, pointing out that rebuilding room stock, restoring attractions, and repairing the infrastructure that moves visitors around the island is not a one-season exercise. Much of that work is still under way. Industry-wide, it was accepted that the Andrew Holness Administration was bound to ask the sector to help carry the burden of funding the expansive post-Hurricane Melissa recovery, as has always been the approach by governments after major disasters.
But when Finance Minister Fayval Williams tabled revenue measures in this year’s budget, she shook the tourism sector by announcing that the 10 per cent GCT, that had softened the blows suffered by tourism activities would move to the standard 15 per cent, effective next year April. Williams said the one-year notice would give the tourism sector itself more time to recover from Melissa. What the finance minister’s calculations did not factor in, however, was the flow of earnings from the sector.
SMITH...tourism is an export industry, so our competition is overseas, and we can’t just pass on any increase Notably, most rates were already negotiated and inked with overseas partners like tour operators. Jamaica’s tourist entities were, therefore, being asked to pass off a 50 per cent rate increase where other sophisticated tourism markets are fighting for the same global tourism traveller. Passing on GCT increases would, at best, be impossible without doing further critical damage to the sector and leaving it naked and e…
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