The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A prominent realtor is advocating that Bahamian vacation rental owners whose properties meet the necessary standard be granted the same tax breaks and incentives as large resort properties.

Mario Carey, chairman and founder of Better Homes and Gardens MCR Bahamas, said such a move will not undermine the hotel industry but instead help satisfy the demand for extra visitor accommodations that it cannot meet alone.

“The operators of large hotels all understand that the short-term rental market – Airbnb, VRBO, HomeAwayfromHome – is here to stay,” said Mr Carey. “They’ve been adamant that government needs to collect VAT on those residential properties that are being used as an Airbnb, for instance.

“What I’m suggesting is that if that same property is being taxed and considered a part of the hotel inventory, and a commercial entity, it ought to be entitled to certain rights and benefits, and those benefits will generate an amazing amount of activity throughout the economy.”

Mr Carey suggested that such tax breaks, and other investment incentives, be made available to Bahamian property owners through either a revamped Hotels Encouragement Act or a VAT waiver if the revenues generated from short-term vacation rentals fall under a set amount. This, he added, would operate in similar fashion to the present VAT threshold where businesses generating less than $100,000 in annual revenue are exempted from the tax.

The Government is already considering such a move. Michael Halkitis, minister of economic affairs, told the Senate recently that the Department of Inland Revenue’s (DIR) drive for all vacation rental owners to register their properties by end-April is - besides ensuring all due taxes are collected - designed to help provide Bahamian entrepreneurs with access to tax waivers and other incentives.

Mr Carey said the trickle-down effect produced by such concessions will drive sales of furniture, appliances, paint, fencing, landscaping and pool construction materials. An expanded, growing vacation rental industry will also drive greater benefits for taxi drivers, rental car companies, restaurants, attractions and excursions.

And greater participation in quality offerings will pave the way for more persons to participate in the fast-growing vacation rental segment, Mr Carey said, keeping The Bahamas competitive in the hospitality industry. “This will feed into a broad cross-section of economic activity by driving up the value of property and, in some cases, moving it to the category of highest and best use of the property,” he added.

“The more money flowing in the economy, the greater the overall impact – from what people spend in the food store to what they spend on major consumer goods and services,” he continued. “The additional income can make a difference in a family’s ability to put a child through college instead of urging him to finish school and find a job. The economic and social impact derived from this market segment can increase the prosperity of the Bahamian people.”

Mr Carey suggested several weeks ago that building a new highway - above ground if necessary - from the eastern end of the Lynden Pindling International Airport (LPIA) roundabout to Bacardi Road on the southern side of New Providence would make vast areas of land more accessible, offering opportunities for affordable housing and commercial development by Bahamians.

The proposal for extending tax benefits in the hospitality sector, he said, comes with a similar tone and a caveat – property owners who benefit from the concessions to convert or improve a portion or all of their residential property to short-term vacation rentals must be Bahamian.

“I just want to find avenues to uplift Bahamians, and tourism is still the engine that drives our economy. Greater participation not only benefits more Bahamians; it provides for a better visitor experience which, in turn, drives more visitors through positive reviews and increases repeat visitor numbers. It is a win-win for all,” Mr Carey said.