Tourism Tax a Bad Move, Jamaican Financial Analyst Says

Financial analyst John Jackson has joined the Jamaica Hotel and Tourist Association (JHTA) in expressing disappointment at the government’s decision to impose a further tax on the tourism industry.

On Thursday, Finance Minister Dr Peter Phillips announced that the government will impose an accommodation tax come September 1, which would yield about $2.5 billion.

Under the proposed measure, hotels with more than 50 but less than 101 rooms, will pay a tax of US$6 per room or its equivalent, per night; whilst hotels with more than 100 rooms but less than 201 rooms, will pay US$10 per room, or its equivalent per night. Hotels with 200 rooms and above will pay a rate of US$12 per room, per night.

But Mr. Jackson argues that the tax measure is a retrograde move. In a release to the press yesterday, the JHTA said the new measures would severely impact the sensitive sector. The JHTA said the tax would make accommodation less affordable for local guests and visitors from abroad and that stopover arrivals would likely decline, resulting in job losses and hotel closures.

The JHTA adds that the situation will be further aggravated by the elimination of commissions and transportation expenses, as a result of allowable deductions in the calculation of the GCT output tax.

Mr. Jackson has also described the reduction of the Government’s proposal to reduce the corporate tax as a backward move. He says reducing the tax to 25 percent will mean employees will be paying more taxes than corporate entities.

He, however, commended the government for its 3.28 per cent fiscal deficit target, but says the revenue measures to achieve it are too conservative.