14-percent VAT on domestic airfares sparks outcry among airlines, tour operators, miners

Last Updated on Tuesday, 31 January 2017, 12:32 by Denis Chabrol

Flying across Guyana will from Wednesday- February 1, 2017- become more expensive for tourists, businesspersons and possibly residents, with the introduction of a 14 percent Value Added Tax (VAT) on local airfares.

“The big challenge to us is all of our customers who depend on hinterland transportation- for example our tourism clientele; our mining clientele- will be affected because the cost of interior travel will go up. We feel as well that this will have an effect on those sectors,” President of the National Air Transportation Association (NATA), Annette Arjoon-Martins told Demerara Waves Online News.

She said that while interior residents are exempted from the tax, it is unclear how the airlines will know who resides in the hinterland. “Even though the hinterland residents are being exempted, finding a fool-proof mechanism to document who is a hinterland resident or not has its own challenges so we also need to look at that,” she said.

The NATA said there should be a “very pragmatic phased approach” on exempting hinterland residents from paying VAT.  An official of Roraima Airways told Demerara Waves Online News that domestic carriers would have to charge every passenger the VAT in the absence of criteria from GRA. “We haven’t received the criteria from GRA. We are going to have to charge the VAT on everyone  because if we don’t and they deem the person ineligible we will have to absorb the cost,” the official said.

Against the background of a projected decline in passengers, she said the domestic carriers would be collecting figures about the impact to make a case for the removal of VAT from domestic airfares. “I am sort of comforted by the fact that we should be able to go back to the GRA within a couple of months to substantiate our claim to show obviously that there will obviously be some shrinkage and hopefully the door will be opened for further conversation,”  said Arjoon-Martins.

Administrator of the Guyana Gold and Diamond Miners Association (GGDMA), Colin Sparman said while medium and large scale miners would not feel the impact immediately, their operational costs and cost of basic food items would increase. “If you go Imbaimadai, Ekereku and so on, these people charge for the products that they sell by weight,” he said. “They (miners) wouldn’t feel it immediately; is when they start to pay and the people start to transfer it to you. The large miners would use charter so the operational costs will go up and we are also talking about the average pork-knocker/small-miner who got a lil wash-down and he goes to the shop, cost will go up significantly for him,” he said.

Gold is currently Guyana’s major foreign exchange earner.

President of the Tourism and Hospitality Association of Guyana (THAG), Andrea De Caires said the VAT on domestic airfares would impact severely on tour operators with whom bookings have been made several months to one year ago.  THAG has since appealed to government for a 60-day grace period or they would have to absorb the VAT. “The biggest concern is for the trips that have already been sold. If a tour operator has sold something and the customers have already paid, it is difficult for a tour operator to now go back and say there is 14 percent more on the airfare so the tour operators are having to absorb that cost,” she told Demerara Waves Online News. De Caires said the only concrete assurance that THAG has received was that its representatives “have been heard” by the Tourism Minister.

Demerara Waves Online News was told that one major tour operator would have to absorb at least US$5,000 on charter bookings that have been made already for February, 2017.

Aviation and tour operators are worried that the VAT on domestic tickets would affect passengers and customers and which would result in market shrinkage and less money to cover operational expenses and debt servicing.