A senior executive at Baha Mar has told a packed gathering of College of The Bahamas (COB) students and faculty that the introduction of value added tax (VAT) will likely increase the cost of visitor experiences in The Bahamas.
According to Vaughn Roberts, a 1991 graduate of COB and senior vice president, finance and corporate alliances at Baha Mar, it will require more of an investment from hotel properties in marketing and advertising campaigns, even as the sector finds itself heavily taxed at present by taxes such as the hotel occupancy tax, hotel licensing fees, business license fee and casino win tax.
“We also see the administration of this tax scheme as an additional cost; a cost to the operator, a cost to the government to enforce, regulate and monitor and all of that is an additional cost that has to be borne by somebody, and it will likely be borne by the end user, the customer. Fundamentally, from an economic standpoint, I tend to think that there are inflationary impacts as a result of the implementation of this tax. The government is attempting to raise about $200 million in revenue and at the end of the day, somebody has to pay for the increased revenue and that comes through end pricing,” he said.
In its White Paper on Tax Reform, the government is proposing that the existing hotel occupancy tax is replaced with VAT at a rate of 10 percent and that food and beverage sales in hotels will be taxed at a VAT rate of 10 percent. All other goods and services that attract VAT will do so at a rate of 15 percent.
Roberts also suggested that a tax on services will present a cash flow challenge that will have a larger impact on small business operations.
