Re: Vacation Rentals avoid VAT embrace – for now. Tribune Business 26th July.
Just reading the headline took me quickly back to my early school days, where the system of reward, for a good homework assignment, might be a little sticky star, in one of the typical colours of bronze, silver or gold. I am convinced now that the Minister of Finance must be doling out similar rewards to the various Cabinet Ministers, as each in turn implements some increase in its departmental fees, or implements some form of increased, or new tax on the people.
Having fired the gun too quickly already, on the web shop stamp tax and the lunatic RPT revamping, and the flats fishing foolishness, all of which will only have negative affects on tourism and winter residents, and all of which contribute significant monies to the government coffers, one would have thought, that the Finance Minister would have called a truce and said “let’s see how the twelve percent VAT goes down before we drown this economy completely”.
Minister d’Aguilar has had a bee in his bonnet about Airbnb, since a month after he was elected to Parliament and Cabinet. I really believe that he thinks that these people come here and don’t pay any duties or taxes at all, and somehow he has got to go to the trough directly, to ensure we get something for their time spent here.
Let me disabuse the Minister, if that is his thought process here. The minute the Airbnb guest books their ticket to come here, from wherever in the world they will come, they are charged the Bahamas Government Ticket Tax and Bahamas Government Departure Tax. And I think the Government gets that tax gross, which I don’t think is the case with the Cruise Ship passengers.
And then, when they land in The Bahamas, they will either be renting a car, or taking a taxi the minute they leave the airport. No, they will not be going in one of the Conglomerate Run Tour Buses that tend to take most of the hotel guests. They will be renting from some Bahamian-owned rental car franchise or Bahamian taxi driver.
I am sure that the rental car company will impose the VAT on the value of the rental and I have little doubt that when they imported their rental cars, they will have paid the exorbitant import duty too and VAT.
I don’t know if the taxi drivers will all charge the VAT and I appreciate that they get a break on the import duty for their cars but the rental car company and the taxi drivers are both paying Import Duty and VAT on the fuel that runs the vehicle.
So next stop after landing will either be the grocery shop or liquor shop, where they will be paying both our Import Duty and Vat, on whatever it is they buy. Unless, of course, they go for the corned beef, but I seriously doubt that.
So having stocked up and contributed their fair share to the Consolidated Fund they will head off to wherever their rental unit is. Certainly during the summer months the first switch they will turn is on the air conditioner, the electrical cost for which the Airbnb Host will be paying, and this will include the fuel surcharge, the theoretical duty that BPL don’t pay, and, of course, the VALUE ADDED TAX.
And if the Minister thinks for one minute that the Airbnb Host gets all the Airbnb rent tax free, he had better think again.
The host is paying Real Property Tax on the property unless it falls below the threshold, and the host is unlikely to be in a position to simply bank the monies received, and in all likelihood takes that money to the grocery shop, the liquor shop and any number of other local businesses that all pay duty and all pay VAT. And when they have to make repairs to the property they are not able to import their material, furniture and fixtures DUTY FREE like the favoured foreign owned hotels, they just have to suck it up and pay the duty and pay the VAT. Unless, of course, it includes corned beef, but I seriously doubt that.
And Minister d’Aguilar, you speak of all of the government services that these people enjoy and I am wondering exactly what you are referring to. I know they would prefer to use public transport but as no Government since the UBP has given it a thought there is no functioning public transport to be had. Maybe you were thinking of them mailing a postcard back home to the family and friends but ooops – the Government run Post office is mostly closed.
On balance, sir, I think you should just relax yourself on this one. Aesop’s fables have a very interesting fable called the “Dog and its Reflection”. In its untamed greed it opens its mouth to grab at the juicy bone in its reflection in the water, and immediately the bone falls out of its mouth and is lost. Keep adding taxes and we’ll all have nothing.
Bruce G. Raine
July 28, 2018.
Originally published in The Tribune and posted here with eh kind permission of the author.