AFC proposes reduced VAT for tourism sector

Last Updated on Saturday, 26 December 2015, 20:59 by GxMedia

There is a call for a change in the VAT regime and a standalone ministry if the tourism sector is to be taken seriously and progress.

Wednesday’s call came from AFC parliamentarian Catherine Hughes as debate on the $220B budget estimates continued.

The government has been talking about the potential of the sector to be a big revenue earner for years and seems finally ready to put up the necessary investments. A US$4M allocation has been earmarked in this year’s budget for the establishment of a hospitality institute.

“How could such a sector with all this potential be lumped with other major sectors like Industry and Commerce.  How can we expect the international marketplace to take us seriously when initiatives to move this sector forward have been put on the back burner for decades. The need for an autonomous tourism ministry is overwhelming,” Hughes said.

The AFC MP, who has been involved in the sector for more than two decades, said tourism was one of the fastest growing industries worldwide and could provide high levels of job creation through training over a short period. To that end she applauded the allocation for the hospitality institute.

Responding to acting tourism minister Irfaan Ali’s earlier call for the opposition to propose alternatives Hughes then listed a number of suggestions which she said could aid the sector’s development.

“In the Bahamas the standard VAT rate is 15% but for their tourism sector its 10 percent. In Barbados the rate is 17.5 percent but a concessionary rate of 7. 5 percent is applied to the tourism industry. Similarly in Dominica the rate is 15 percent but reduced to 10 percent for the tourism sector. 

The private sector in Guyana lobbied hard for such a tiered approach long before the implementation of the VAT. Today the tourism industry a still relatively new and emerging industry in terms of growth and is taxed heavily like any other sector,” Hughes said.

She added that Guyana needed to adopt a similar approach to jump start the industry. She also called for a level playing field in the granting of incentives noting that tourism operators in the interior regions enjoyed a wider range than those in Georgetown.

“The honourable Minister of Tourism has advised me that the Guyana Tourism Authority recorded 200,122 visitors and I congratulate them on that. But regretfully, inadequate financing year after year has meant that Guyana has failed to implement a comprehensive destination market plan, which is fundamental to moving any tourism industry forward, and so we continue to wallow in the dream of the potential this sector can offer,” Hughes continued.

She suggested the funds realised from the departure tax be used to finance the creation of a proper marketing strategy. Hughes also rapped the government on construction of the Marriott-branded hotel, saying the money invested could have been used instead to fund a more adequate marketing campaign to showcase Destination Guyana which remains “a well-kept secret.”

“We are grateful for the free coverage we get through the numerous documentaries and series like “Gold Rush” but we will only be successful when we specifically examine whom we are hoping to reach and what are the best means of getting them to buy that ticket and come visit our beautiful country.

 Instead “marketing Guyana” is going to the same old locations and events held in the North America targeting a diaspora who need to see some damage control messages as every day stories of crime and attacks on returning Guyanese scare away some of these potential visitors,” the AFC MP said.

Hughes also lauded a $500M earmarked from a $1B allocation to clean up Georgetown but added that the best long-term solution remained the urgent holding of local government elections.

The budget debate continues on Thursday.