The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE Government is looking to “tighten up” tax collection from second home/vacation rental properties, its Financial Secretary yesterday telling Tribune Business there was serious concern this sector would “fall between the cracks” as the Government moves on tax reform.

John Rolle, who was a presenter at a small business summit hosted by the Exuma Chamber of Commerce, said the second home/vacation rental business was an important part of the tourism industry, especially on the Family Islands.

But he added that the Government was currently not collecting what it was entitled to collect from these activities.

“I think there is a concern on the whole with second homes in terms of revenue collection,” Mr Rolle said.

“What is supposed to happen is if you rent your home to someone who comes here on vacation, they should be paying the room taxes similar to when they are staying in a hotel.

“The problem is that we don’t always have the systems in place to know when the rentals are occurring or the mechanisms to ensure that when people declare how much they charge for their homes that those amounts are correct.

“There is a lot of work going on in terms of how to deal with that, and that involves the Hotel Licensing Board, which I believe monitors the collection of those taxes.”

Mr Rolle added: “There is work underway to see how that process can be tightened up so that those taxes can be collected or, at a minimum, you have a sort of reform so that the Government collects more revenue from those activities.

“For various reasons we believe that the revenue that is being collected is not what the Government is entitled to collect. Unless you can police the activities sufficiently, not all of the renters feel sufficiently incentivised to fully disclose how much they are earning, so if you don’t get full disclosure from these people they are probably not remitting to Government the full amount of the taxes,” he added.

“It should be the case that if you rent a vacation home for a week, occupancy tax or the room tax should apply just as if you were staying in a hotel for a week. A person who is flying in from outside the Bahamas, when they show up here may have already paid for that vacation.

“I think part of what the Hotel Licensing Board is looking at is how, working with the Ministry of Tourism, you can be plugged into that process, so that when these contracts are being formed in those same steps there is a mechanism to get the tax or make sure that the tax is included in the price.”

Mr Rolle said that since many of these transactions occurred online, systems would have to be put in place to capitalise on the electronic nature of such transactions.

“There is a need for reform and administrative improvements in that area so you can collect the tax,” he said.

“The White Paper says it’s a 10 per cent proposed tax on hotel rooms, so you still want to collect that 10 per cent if it’s happening on vacation rentals and the like. There will be a concern that this aspect of the industry doesn’t fall between the cracks with the reforms.

“It’s an increasingly important part of the tourism industry, especially with regards to the Family Islands. There is no reason to believe that we are collecting the total amount of what should be collected from those taxes. Efforts are diligently underway to identify reforms that can tighten up on the collections.”