By LYNAIRE MUNNINGS
Tribune Staff Reporter
lmunnings@tribunemedia.net
SMALL business owners said the imposition of VAT on foreign-owned yacht charter fees had contributed tremendously to the industry’s decline in the past year.
The Department of Inland Revenue introduced a VAT rate of ten per cent last year that required foreign-flagged charter yachts to pay this rate on the value of their charter contracts.
The charter yacht industry is often seen as an elite luxury sector lucrative for yacht owners and marina operators. However, some small businesses benefit from vessels that use The Bahamas as a base for charter operations.
Dion Munnings, the owner of Paradise Provisions, said although his business has had a steady flow of customers, he has seen a noticeable decrease during the usual peak season.
“If you compare this year with last year and especially right after the pandemic, you’ll see a serious drop,” he said. “You look at the marinas, they used to be full around this kind of time.
“It’s July now, people coming out of school, this is a busy summer charter season, and I have had yachts telling me that people declined when they see that that charge come off for VAT.
“When they’re presented with that, it’s like they decline the whole charter because some people just won’t pay it and it is high. It’s really a downfall.”
He suggested that reducing the tax would relieve small businesses benefiting from the yachting industry.
“If you spend $150,000 a week or $200,000 a week to rent a boat or charter boat and you’re going to pay $20,000 on top of that because of 10 per cent VAT, that’s just money you’re giving away,” he said.
Another business owner who requested anonymity because he dislikes publicity shared similar sentiments, saying business is now slower than during the ‘‘slow season”.
The man, an owner of a cleaning company, said he has had one client per month recently.
Meanwhile, Nevron Harris, owner of Slim Upholstery, acknowledged the decline but said his business was not significantly affected because his company caters to various sectors.
He said he still intends to turn “lime into lemonade”.
Comments
mandela 10 months, 1 week ago
That is not money given away. If a person can pay $150,000. or more for a week boat ride they can pay 10% vat for using our seas.
ThisIsOurs 10 months, 1 week ago
The question isnt whether they "can" pay, the question is, is it more than they are willing to pay. And certainly you can stand on principle and say this charge mirrors the service provided. The one thing you cannot do is demand people continue the service. It's why initial price setting is so important, changing it is hard.
Imagine starting tomorrow the Rupert Roberts says all packing boys must get a minimum 10 tip for any shopping cart with more than 2 bags. You "can" afford 10 dollars but how would you view that new tax and would the 10 mandate turn you off completely from use of packing boys? These tradeoffs are things that marketing professionals and economists mull over every day, at which price increase will the customer balk? Our decision makers are clearly unaware of the concept. They believe like you that if you have money for discretionary services, you'll just spend it no matter the jump in price. Twitter is experiencing this backlash on introduction of fees as well.
The Excel spreadsheet that allows you to increase the service fee rate 200% and project a massive increase in profits doesnt tell the full tale.
ThisIsOurs 10 months, 1 week ago
Speaking of prices I'm baffled at news coming out of the US. It was reported this week that prices are going down. But Rupert Robert's reported at the same time that his supplier prices are going up across the board. In the US gas prices are to their pre COVID levels. But our gas prices are almost 6 dollars, the COVID high.
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