Article Details

 The Government of St. Lucia has shared a Policy Proposal with the Chamber and invited its’ feedback and comments. The proposal seeks to fund the St. Lucia Tourism Authority through a Head Tax on each visitor per night on island as a consequence the GOSL proposes to waive duties and VAT on Food and Beverages bought by hotels as a way of compensating them since the hotels claim they would not be able to pass on the “Head Tax”.

 After analyzing the proposal and meeting with members who would be directly impacted by such a policy (Members from the Hotel Sector unfortunately did not attend the meeting) to discuss and assess their views on the proposal the Chamber advised the Government of its views underpinned by the following points: 

 1.       We support the introduction of the Head Tax on visitors to fund the St. Lucia Tourism Authority.

2.       The Chamber applauds the Government on this innovative, low impact proposal.

3.       We totally disagree with the waiving of duties and or VAT to Hotels as a consequence of the introduction of the Head Tax, equivalent to the total level of Head Tax generated.

4.       We do not believe that the Head Tax would impose any additional burden on Hotels or any other sub sector of the economy; it is neutral as it is being paid by the visitor as a separate charge, which they are accustomed to paying wherever they travel. As a high end destination, an additional US$60 to US$240 should not change the competitiveness of St. Lucia. (i.e. a couple staying 6 days and a family of four staying 6 days)

5.       We definitely do not share the view that the Hotels are not able to “pass on the head tax” on the following grounds: other destinations currently do the same, seemingly without any difficulties; prices for hotel rooms change every day and many times a day; if pre bookings have been made it is easy to provide proof so that SLTA can provide a refund. Eventually all Hotels will “pass on” the tax and the relative prices will remain the same.

6.       The provision of the duty and or VAT waiver on food and beverages will potentially have catastrophic effects on the manufacturing and distributive sector and disproportionately hurt the small and medium sized local businesses.

7.       The proposed imposition of the Head Tax, coupled with a duty and or VAT waiver will disproportionately benefit the Hotels since Airbnb operators, according to the meeting, will be charged an equivalent fee by Airbnb which will be remitted to Government. Since the AIrBNB properties do not provide meals, they generally will not benefit from this concession, as they will not get the “refund or benefit” that Hotels will.   

8.       The leakage of duty free liquor and tobacco into the local market will likely be aggravated through the Hotel Stores who sell those products.

9.       The waiver as proposed is equivalent to Government giving the Hotel Sector revenue which should otherwise accrue to Government and may approximate EC$42million; this policy if implemented will result in reduced funding available for (1) debt servicing, (2) the St. Jude’s Hospital completion, (3) OKEU operations (4) National Health Insurance,(5) Universal Health Care,(6) Resources for the Police by way of increased boots on the streets, cars CCTV, etc. which will redound to the benefit of the very hotel sector.(7) School Repairs (8) Funding SALCC improvements, to name a few.

10.   This policy will reinforce the continued bias towards this sub-sector which can further empower it to adversely impact “allied sectors” due to the exorbitant additional subsidy this represents.

 11.   The combination of the two policies will bring three levels of benefit to the Hotel while hurting the rest of the economy. The benefits are (1) improved marketing for their product and service by a public sector agency (no other sector or firm enjoys such privilege), (2) reduced cost of food and beverages and (3) the potential for the heard tax to be “passed on” and not lower prices to guests.

 12.   Finally, one cannot rationally justify providing a seemingly uncalled for windfall of close to EC$42million to one already privileged sub-sector, while at the same time the “allied” sectors are, deliberately, and with the aid of additional government policy, being crowded out and struggling to participate in the Tourism economy. This must also be seen in the context of the long running budget deficits and the high debt servicing level which hampers the Government’s ability to provide some badly needed public services at a reasonable level to the poor people of this country.