EDITORIAL - Be careful about travel tax

GIVEN ITS bad fiscal situation, no one can quarrel with the Government for harbouring all kinds of ideas for increasing its revenue - even if hare-brained.

But as the administration should be aware, what is worse than formulating bad policy is actually implementing it. And worse, still, is sticking by that policy.

Neither of these, we think, is the intent of the Golding administration, which is is why we would urge it to give careful thought to the proposal for the doubling of tax paid on visitors arriving in the island, by air, to US$20 per person.

If that could be achieved and all things stay equal, the increase would mean, in the next fiscal year, assuming two million stopover visitors, around US$40 million, or more than J$3.4 billion from the tax.

But serious people who know more about these matters have warned the administration that things are unlikely to remain equal if the arrival tax is hiked. They fear it could lead to a decline in visitor arrivals to the detriment of the tourism industry.

Of course, the Government will note that even in the global recession Jamaica has not only maintained but increased its visitor-arrival numbers, even as those of Caribbean competitors have declined. And the administration is projecting the same for 2011. This is a wave that the administration apparently believes it can continue to ride - increased tax notwithstanding.

Wayne Cummings is one of those serious people with other views and with whom the Government should talk before implementing the proposed tax hike. He is president of the Jamaica Hotel and Tourist Association.

According to Mr Cummings, a major part of the reason that tourists have continued to come to Jamaica in significant numbers is because hoteliers have discounted room rates. No one could raise rates in current market conditions, he has said.

There is the counterclaim from critics that tourism, in general, and hotels, in particular, get substantial tax breaks, including on profit, as incentives for expansion and refurbishing. The Government, the argument also goes, subsidises the international promotion of the industry.

Cruise operators not paying tax

But there is the weighty counterpoint, as has been reminded by Mr John Issa, the principal of the SuperClubs hotel chain, that the cruise operators also share most of the benefits, without paying the taxes.

For example, Mr Issa pointed out over several years that although a US$2-head tax has been applied to cruise passengers, the lines have paid "not one cent". Jamaica is now owed US$12.5 million.

The Government has been unable to enforce collection for a simple reason - every time it tries to collect the money, the cruise lines threaten to stop calling at Jamaican ports in favour of other destinations. Hotels, on the other hand, are large complexes of concrete and steel that can't sail anywhere.

Tourism's unquestionable importance to the Jamaican economy is accentuated by present circumstances. It is important, therefore, that the Government tread carefully and not do anything that would hurt its performance.

Moreover, some might claim it paradoxical for Jamaica to be complaining about other people's tax on travel when it wants to raise its own.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.