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IT’S MY BUSINESS: The winner takes all

Pat Hoyos

IT’S MY BUSINESS: The winner takes all

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The Barbados Hotel & Tourism Association late last week finally came out and said what was obvious from the moment the Freundel Stuart Administration’s sweetheart deal with Butch Stewart was announced.
But by naming the names of the hotels which could not qualify for the concessions Mr Stewart is getting, the absurdity of the policy was driven home.
Simply put, the all-inclusive hotels currently on the island which would not qualify read like a who’s who of hotel properties here.
Here you have a Government which has, since it took office under the late David Thompson, touted austerity measures as the way to get Barbados out of its economic quagmire.
Fundamental decisions were taken which completely re-wrote the country’s economic playbook, if you will.
One of them was raising the cost of gasoline and diesel by something like 60 per cent overnight.
The rationale for this was that Barbadians had enjoyed a subsidy on energy for too long and the Barbados National Oil Co. had been brought to the verge of bankruptcy as a result.
Prices rose overnight too.
Remember that this move by then Prime Minister Thompson came soon after he had raised the fees on a long list of Government services, so the straws on the camel’s back were reaching breaking point.
Another fundamental move was raising the Value Added Tax rate by 2.5 per cent in late 2010, a month after Mr Thompson’s death.
All along the hoteliers and other big players in tourism were asking for relief, not for their own personal sakes, but in order to try to keep their products competitive with prices around the region and to some extent, the world.
Already a high-priced destination, Barbados saw its cost of living increase significantly. But no matter how they put their case, the answer was always we are looking at it, maybe tomorrow, maybe, maybe not.
The overriding principle was that we must reduce our consumption of foreign exchange. We must replace imports of food and beverage with more locally produced items, and so forth.
It soon became clear that taxing more was bringing in less revenue. As I have demonstrated here before, the year 2011 was the peak year for VAT and other major revenue streams.
But the Stuart Administration would not admit it and try to correct the situation. Unable or unwilling to rein in its own spending in order to preserve the jobs of a few, it preferred to lay the burden on the many.
Eventually, the many fought back by purchasing fewer items and investing less in the economy, leading to the stalemate where we more or less find ourselves today.
Then someone had a brainwave: let’s go get Butch!
How they got Butch was through a deal that not only excludes the long-suffering players who have been weathering the storm all along, but will actually place them in an even worse position by giving the region’s biggest tourism operation essentially duty free zones in which to operate.
Guess who will be excluded from these Sandals-Beaches duty-free zones? Why, only all of the other all-inclusives plus the rest of the tourism industry.
In trying to defend the indefensible, Minister of Tourism Richard Sealy said last week that the concessions to the Butch were nothing more than what had been given to other hotels for years except for food and beverage concessions.
Therein lies the rub. That will save Sandals-Beaches millions in import duties and VAT each year and place them in a position to price their products much more competitively than the other players.
So the BHTA is correct in saying that these concessions have to be extended to the rest of the players in the industry otherwise we will have the old “un-level playing field” situation occurring.
Put another way, if the Government goes ahead and gives these concessions only to those operators it deems to have invested half a billion or more, it will be saying that unless you do invest that much in your plant you will be penalized financially.
Then it will turn around and throw them all a lovely cocktail party to encourage them to keep playing their valued role in developing our tourism brand.
It becomes a zero sum game: the more you give to the few, the more you take from the many.
Isn’t it ironic that the defining tourism policy of an administration which preached austerity and higher taxes to reduce spending of foreign exchange is opening the gates for a few mega-players who will have to pay no taxes at all?
Is that not an admission by the Government that its own policies have failed utterly?
As ABBA once sang, “The winner takes it all . . . ”
• Pat Hoyos is a publisher and business writer.