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Belize Hotel Association Meeting

Member of the Belize Hotel Management Association met in San Pedro this past Wednesday, February 1, to further discuss the implications of the new General Sales Tax (GST) that will be implemented on July 2006.

On December 28th, 2005, on the occasion of the second reading of the GST Bill, the accommodation sector was classified as “EXEMPT”. Under this classification, hotels would not charge GST, but would still be subject to the accommodation tax collected by the Belize Tourist Board (BTB). This is of great concern for hoteliers as the accommodation sector would not be a registered taxpayer and as such would not be entitled to claim inputs on supplies.

Its implications would mean that the accommodation sector would either have to absorb the 10% tax it pays for all supplies purchased to produce a hotel room, or raise hotel rates in order to maintain the same level of profitability. The GST paid on any remodeling, upgrading or other capital expansions by hotels, would be absorbed by the hotelier as no input tax credit would be allowed. The exempt status does not apply to any other sources of income to a hotel such as food and beverage and tour operations. Other considerations that the members discussed at the meeting were:

*That the tourism sector has seen a steady increase in the cost of doing business – including increased utility costs, *Belize’s occupancy rate is the lowest in the Caribbean. The average occupancy rate in the Caribbean is 63% and Belize is approximately 40%; and *That marketing efforts of the BTB are funded primarily by hotel accommodation tax. In the past year, the accommodation tax was increased from 7% to 9%.

In conclusion members of BHA believe that classification as EXEMPT is not acceptable to the hotel sector as it will result in room rate increases which will adversely affect our already low occupancy levels, and it will decrease hoteliers’ profitability.

Over the past several months, BHA has been lobbying tirelessly on behalf of its members on the GST issue. The BHA firmly believes that either of the following positions is in the best interest of the sector:

1. That the accommodation sector be Zero rated under GST, since we are an export service, and that a 9-10% accommodation tax be paid to the BTB; or

2. That the accommodation tax be repealed and the accommodation sector pay into the GST along with all other sectors. The Belize Hotel Association will continue to lobby for such amendments to be considered before the new tax comes in to effect.

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