EDITOR, The Tribune.
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
Nassau,
July 28, 2018.
Comments
ohdrap4 5 years, 8 months ago
no one said it was a tax free visit.
however, in the latest vat amendment act, persons with airbnb have become taxable persons, and owner-occupied homes means you conduct no business.
i other words, if you rent as airbnb you might lose your property tax exemption.
the vat amendent act has been posted.
Governorgeneral19 5 years, 8 months ago
Last I checked my friends that own properties that they have on overnight rental programs such as VBRO or AIRBNB collect and remit the various sales and lodging taxes like any other hotel. They pay city and county business and property taxes. When they go grocery shopping the pay the 9.75% sales tax (Groceries are not tax exempt in this state). When they go out for dinner they pay the 11.50% restaurant sales tax. If you want to be in business you pay the costs associated with being in business. Don't worry the visitors will continue to come, price isn't the problem it's service.
newcitizen 5 years, 8 months ago
So if I want to open a small boutique hotel with 3 or 4 units, I need to get approval and a business lincence and pay the hotel tax and charge VAT and get commercial insurance and pay real property tax. So I play by the rules and try and make a business that helps the country and maybe pays some employees and then Bruce here is saying that AirBnB's can just do as they please without having to do any of this because they are such a big contributor. If your AirBnB brings in so much for the country then the hotels bring in far more.
We need to change our attitude of always pointing fingers and saying well they are worse, or they got more. Take some responsibility. If you want to open your house up like a hotel then you should be treated like a hotel, and if you think hotels are treated unfairly then try and get it all changed, but don't say 'well I should get special treatment'. Play by the rules or try and change them, don't try and cheat them and justify it to yourself.
Porcupine 5 years, 8 months ago
However, his overall point is correct. This government doesn't seem to realize that the more money taken out of an economy in taxes, the less money there is to spend on goods and services. If there was a bit more economic literacy, we would understand that the idea of free markets are not so dissimilar to free people. Take off the shackles and we thrive, people and trade. Government's job is to run the country in a parsimonious manner, gathering as few taxes as possible to make that happen. Is anyone in this government thinking like this? I can't see it. But the gimme a government job for life, with a pension, attitude surely stifles true entrepreneurial spirit and the idea of lifting the tax burden at all.
Junkan00 5 years, 8 months ago
Well said Bruce. Sadly our country is bogged down by protectionism and lethargy. The second home owners (however small), bring inward investment, spend money in our daily economy, and bring new people (friends and renters) to spend their money in our island nation. Any money made though rental of their home usually stays in the community, supporting local jobs and services. These rentals do not compete against our hotels, as the people who choose to stay in private rentals want something different (to have more privacy, be able to cook in on the odd evening, and to not be restricted to where they dine and drink). Most importantly, they are the people who go out into our communities and mix with local people, and spend their money with small independent restaurants and bars. We have to face the facts that the Bahamas is already frighteningly expensive, and the service standard three stars at best, which results in not very good value for money for our visitors. They come, and many keep coming back because of their love of our beautiful country and the people that they have met and shared wonderful times with. However everyone has a limit to how much financial pain/abuse they will tolerate before they have had enough. That maybe they then choose to holiday in another better value country, or worse still if they are a small second homeowner, they sell up (depressing the struggling bottom end of the property market) and take their investment either to their home country, or a competing island nation. On Exuma I believe our continued growing economy (I believe the fastest in our country), is not down to hotel based tourism (as no new hotels have been opened here in many years), but to the inward investment by second home owners, the services and support that hey require from local suppliers and trades people, and the cash they inject into our economy from their regular visits, their friends and their renting guests.
Well_mudda_take_sic 5 years, 8 months ago
Why should smart tourists coming to our shores for sun, sand and sea have to incur the outrageous room rates, and ridiculous food & beverage costs, charged by monstrous hotels of a different era. Atlantis and Baha Mar, with their enormous cost structures, are simply dinosaurs, destined to be forever unprofitable and eventually extinct. The ever increasing chasm between the 'haves' and 'have nots' is a global phenomena which means there will be fewer and fewer tourists who can afford to help support the unsustainable cost structures of dinosaur hotels. And to think dimwitted Minnis has proposed government buy the Grand Lucayan Hotel. Such an investment would be another flushing of our VAT dollars down the proverbial toilet...much like all of the other government owned corporations and entities. What a joke!
DDK 5 years, 8 months ago
Property owners using their condos and houses as Airbnb and Vrbo rentals USED TO PAY HEAD TAX like the hotel guests for their visitors, until the former government removed the hotel tax, thinking it would be replaced by VAT. This was never followed through as the home owners do not register as VAT businesses. This tax is one that has been lost due to bureaucratic inefficiency and should be reinstated. Contrary to popular belief, many of these multi-family groups of visitors bring their own groceries and beer and park themselves at these vacation homes, particularly if on or near a beach. With the duty free exemption on building supplies extended after the last hurricane, many non-Bahamians have taken advantage of this offering and have built multi homes purely for the purpose of using them as vacation rental units. Bahamians currently cannot have Airbnb and Vrbo wired funds to a Bahamian account, so unless they happen to have a foreign bank account, the non-Bahamians are cleaning up and Bahamians are clean out of luck with this rapidly growing vacation rental market. Hopefully this may change when and if the Bahamas falls back into the good graces of the foreign bank lending conglomerates.
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