Bahamas Aviation Tax Could Hurt Tourism Industry

New and increased taxes on the private aviation sector in the Bahamas will result in a loss for the country's tourism industry of $16-20 million in revenue, according to an industry insider.

As of July 1 the government of the Bahamas has levied a $50 customs tax on small private planes. In addition, the departure tax applied to aircraft pilots and crew, which rose from $15 to $20 per head in the last few years, has now been lifted to $25 per head by the government's 2013-2014 Budget.

Jim Parker, president of Caribbean Flying Adventures.com, a leading pilot's guide in the region, expects that there will be a 10 percent drop in the number of private aircraft coming to the Bahamas as a result of the new tax rates.

"Any trained economist will confirm that the extra $50 is going to be more than offset by a loss of revenue to the tourism industry and the government taxes on those revenues as pilots stop flying to the Bahamas," Parker said. "I think any economist that is looking at this situation holistically would have told the policy makers that this decision would be shooting themselves in the foot. For the sake of $2 million, conservatively they are going to lose $16-20 million in the tourism sector. It's a bad decision that needs to be reviewed."

Private flights from the United States to the Bahamas currently number approximately 40,000 and spend an average of $4,000 to $5,000 per visit. Annual revenue from these flights is between $160 million and $200 million.

Many pilots have stated that they will no longer be flying to the Bahamas, according to Parker. "The Bahamas has been a favored destination for years but the arrivals have been declining in recent years, perhaps because of the steady increase in airport departure taxes. The Bahamas is the only island destination that applies the departure tax to crew as well as passengers."

Source: Global Tax News