The Tribune

By Earyel Bowleg

Tribune Staff Reporter

ebowleg@tribunemedia.net

Opposition leader Michael Pintard yesterday argued that new passenger taxes could cause cruise ships to seek cheaper destinations.

During his 2023/2024 budget contribution, Mr Pintard cautioned that increased passenger taxes in the Passenger Tax Amendment Bill will cause cruise companies to seek alternative destinations to the “detriment” of the local tourism industry.

He said: “While everyone believes that the passengers who take cruises through The Bahamas should contribute more to our economy, the government must be careful not to raise too much too fast with the resulting effect that the cruise companies are minded to take their passengers to less expensive destinations.

“I am not here today to carry water for the cruise companies but I do want to ensure that the government acts responsibly and in such a way that they don’t cause the cruise companies to think about moving their ships to other destinations to the detriment of all Bahamians dependent on this very important economically impactful industry.”

Mr Pintard argued that as many cruise passengers purchase their tickets in advance the cruise companies will have to absorb the taxes for customers that have already paid.

He said: “In addition, cruise companies typically pass government taxes and port fees straight through to their customers. By making the effective date of almost all of these new taxes as 1 July 2023, one month after being proposed, the cruise companies will not be able to pass these increased taxes through to cruise passengers who have already booked and paid for their cruises.

“They will have to absorb the entire amount of the increase since most cruise passengers purchase their cruises way before they actually depart on their cruise and the cruise companies cannot go back to the passengers and ask them for more money once the ticket has been paid for.”

The Marco City representative said cruise lines will evaluate the financial impact of the increased taxes and that while it may not impact the industry in the short-term, they may begin to seek alternative destinations moving forward.

He said: “The cruise companies are definitely going to take note of the size of the increase and the speed at which that increase is being implemented and you gotta believe that they are now actively evaluating other destinations that are less costly. Is this going to negatively impact our core destinations, Nassau and Freeport?

“Maybe not in the short term-but I absolutely believe that once the cruise companies finish their evaluations and absorb the costs that this Bill is forcing them to absorb, then they will do what most private companies do and start to think about other destinations.”

Mr Pintard maintained the government must be sensible in the implementation of the new taxes and added that the new $2 Tourism Enhancement Levy is an additional tax for Bahamians although the government said that there are no new taxes for Bahamians in the budget.

He said: “We also note the damages that have been done to the seabed and the discharges from some vessels in Bahamian waters. Having said that, the government is still duty bound to follow a sensible process in the introduction of new and increased taxes.

“I have noted with amusement how the government is touting that most of the new taxes in this Budget are being paid by foreigners.

“I want to address this notion that there are no new taxes for Bahamians in this Budget. Well clearly, in this Bill, we see that, with the introduction of a new Tourism Enhancement Levy, all Bahamians will now have to pay an additional $2 each time they buy a ticket to come home from overseas.”

Mr Pintard also criticised the reduction in the allowance for operational expenses at the Airport Authority and questioned if the current passenger taxes will be enough to maintain operations.

He said: “You will note an 84% reduction in the allocation for the operational expenses of the Airport Authority which is the government entity that owns and manages all of the country’s airports. I am confused! I am sitting here wondering how they are going to pay all of the employees of the Airport Authority with their allocation being reduced from $10.5m down to $2m.

“In the Passenger Tax Amendment Bill, you will note that the passenger tax on persons arriving by air remained unchanged at $28. But, I am fearful that this $28 amounts to a mirage since the only way that the Airport Authority can fund its operations is to raise fees it charges its passengers for using its airports.”

Mr Pintard also suggested the government issue bonds to finance Family Island airports that would allow Bahamians to invest the new infrastructure instead of imposing a passenger facility charge on both locals and visitors.

He said: “Right now, no Family Islander pays a dime (or very little) to use any Family Island Airport. Well, I am of the view that that is about to change… and change BIG! Big fees are coming for all passengers who depart or arrival in Nassau.

“It is my understanding that the government is considering or had determined to impose a passenger facility charge of $40+ dollars to finance family island airports. We advise the government should use the data to inform a decision to go the way of bonds to secure financing for the airports. The PFC is seen as a tax on residents and tourists. It’s getting heavy pushback from residents who view it as a tax.

A series of bonds (islands, airports and maturity dates) based on the schedule of construction, would allow the investing public to participate and earn steady income on revenue bearing infrastructure (airport tolls). Bonds should also spread the wealth more equitably in the society if tiered appropriately. Meaning the price of entry could be tied to interest and maturity to permit small and large Bahamian investors to buy the bonds.”