The TCHTA and TCI Chamber of Commerce, are shocked by Government’s alleged decision to increase the country’s Customs Processing Fee (CPF), a move that will undermine the tourism and hospitality industry and ultimately threaten the destination’s development.
It is the understanding of TCHTA and the Chamber of Commerce that the alleged Customs Processing Fee will increase from 6% to 7.5% and is proposed to take effect on November 01, 2013, along with a proposed 12% tax on other services such as spas, water sports and excursions such as diving, fishing, charters etc. It is our collective belief that this proposed Customs Processing Fee increase will not only damage the country’s major sectors but will be detrimental to the overall growth of the nation, setting back the destination’s development by at least a decade.
The lack of consultation with the public and businesses, shall result in the soon to be implemented Customs Processing Fee and other new taxes having a significant adverse effect on businesses which (all) rely heavily on imports to carry out their operations. Reacting to the news was TCHTA’s Board who expressed their deep disappointment with Government’s decision stating, “What is worrisome is that these taxes will negatively affect all residents of the Turks and Caicos, all tourists and will also put an increased strain on the already fragile economy. These alleged taxes definitely came as a surprise to our members and businesses in general and we all wish TCI’s policy makers would have consulted with us before making decisions which will negatively impact the tourism and hospitality sector which we collectively represent.
No consultation with the sector especially with the largest Associations like TCHTA and Chamber of Commerce is considered very much unacceptable and is not in the spirit of working together in a Public, Private Partnership as is the rhetoric of the Government. This is not the way to do business or promote symbiotic relationship.”
The Board also noted, “Businesses and residents alike have to live with an unpredictable taxation environment which only serves to undermine confidence in the policy makers and creates a very unstable economy. In the absence of manufacturing and agriculture sectors in TCI, businesses have no other alternative but to import 90% of their inventory, be it furnishings to outfit their properties or food for their Restaurants, in order to keep their businesses afloat. These taxes will force businesses to reconsider their budgetting strategies going forward, which may impact employment, resulting in sector lay-offs. Businesses want to maintain and grow their operations in TCI and higher taxes will not encourage them to do this effectively especially with the repressed economy.
This new proposed increase along with other proposed changes in the tax regime will have consequences which undermine the desire of our members and businesses to stimulate the economy. We foresee that there will be an inability for small businesses in particular to regain the taxes and fees we are forced to pay the Government.”
In the past three years businesses saw two accommodation tax increases from 10% to 11%, then again from 11% to 12%. In 2011, Customs Processing Fees also increased to 6%, six months after being reintroduced.
NHIP employee and employer contributions increased from 2.5% to 3% each, a 1% Insurance tax on premiums was introduced along with a 1% Banking tax on fees and wire transfers. Other increases or new taxes in the three year period included an increase in the importation tax on alcoholic beverages, an increased Fuel tax by $0.75 per gallon, a 30% increase in power rate for large hotels, a 15% tax on freight and insurance on all imported good with the exception for building materials and a stamp duty on real estate went from 9% to 10% for real estate sales over $500K. Another recent increase which is yet to be confirmed by Government is an increase in work permit fees, which already saw a 35% increase in 2011.
