Government Announces Tax Relief for Tourism Industry ...Says Good Season Coming Up

During a keynote address presented to the Belize National Tour Operators Association's (BNTOA) Monthly General Meeting held at the Radisson Fort George Hotel, the Prime Minister, Right Honourable Manuel Esquivel, announced that hotel room taxes will not be increased. He also said, "It is a fact that since 1993 up to the end of the past financial year, the Government has subsidized the tourism industry to the tune of almost 5 million dollars in the form of relieving the industry of taxes..." It is not known what taxes the Prime Minister was referring to; hotel rooms are zero rated under Value Added Tax, thus avoiding a straight across the board 15% increase to tourists on April 1st of 1996. Some large resorts also have development concessions.

On Friday November 8, 1996, the Honourable Henry Young, Minister of Tourism and Environment made the following announcement in Cabinet: "Over the past several years, the tourism industry of Belize has experienced growth and development. Recently concerns have been raised in the private sector that this trend is decelerating and that the tourism industry is being seriously threatened. Politicians and aspiring politicians have gotten into the fray using the second quarter statistics which is always low as a barometer for things to come.

In a recent statement, Jean Holder, Secretary General of the Caribbean Tourism Organization stated: 'On the downside, the Caribbean Hotel Sector, while able to attract through its luxury segment, some of the largest revenues in the world, has continued to suffer from chronic unprofitability. High cost inputs, due to widespread import of almost all the goods and service needed by the industry, a burdensome regime of taxes and duties, high wage rates, the excessive cost of energy and water, and low productivity, have been identified as some of the highly probable causes of this condition'

Several factors have the potential to hold back the continued development of tourism in Belize. These include the following:

- The cost of Belize as a tourism destination, including airfare, is rather high and appears to be non-competitive. We have just completed an agreement with American Airlines which will get us in the Caribbean promotion with lower airfares.
- Energy, water, telephone and labor costs in Belize are considered to be high.
- The 1996 Summer Olympics attracted visitors who may have otherwise visited the Caribbean.
- Competitive destinations (Mexico-Guatemala-Honduras-Costa Rica), Belize's immediate competitions are relatively cheap comparatively.
After consultation with the president of the BTIA and the Minister of Finance, they have agreed to the following:
- Retention of the accommodation tax at the current (7%) seven percent rate. The industry does not pay VAT on rooms. In a general exercise the list of zero rated items is being reviewed with a view to assisting the industry.
- Reduction of fees collected at some archŠological sites.
- Continued tax relief on capital items for the various sectors of the tourism industry.
- Duty exemption on promotional and marketing material brought in from abroad.
- Reduction of cruise ships passengers fee from US $20.00 to US $15.00.
- Continued support for loans to the tourism sector via the Development Finance Corporation which presently has funds for this sector.
These proposals, if acted upon, could send a clear signal to the private sector that the Government of Belize is committed to the further development of tourism. For its part, the private sector will pledge to diligently:
- Seek to remedy those areas of financial abuse it knows exists (under reporting of taxes, smuggling of US$ abroad, not moving US$ thru the Belizean system).
- Seek to maintain the competitive standard of the tourism product for which it is responsible.
- Seek to encourage greater local participation in the Industry through affordable pricing and other promotional activities.
- Increase the level of linkages with agriculture.
Contrary to what the naysayers are praying for, booking for the season is way up. Crime against visitors is down thanks to actions by the Ministry of National Security and Tourist Board. Belize City is spruced up, more people are trained, facilities in all districts have been upgraded and barring an unforeseen disaster we are going to have an exceptional season."

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