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EDITORIAL - Tourism joins the effort

Published:Friday | June 8, 2012 | 12:00 AM

We are glad that, in the end, tourism interests engaged the Government, as Wykeham McNeill put it, in a spirit of cooperation on tax measures that will affect their sector.

What this translates to practically is the Jamaica Hotel and Tourist Association's (JHTA) agreement to help the Government 'sell' its imposition of a US$20 tax on airline tickets originating abroad for travel to Jamaica.

It is in JHTA's interest to do that. For the airline levy shifts the greater part of a tax burden that its members would otherwise assume. Moreover, seeming aloofness might cause Jamaicans to assume the sector's disinterest in sharing the national burden.

This year's Budget was crafted in the context of Jamaica's crisis of debt and its narrowing space within which to deflect a reckoning. We owe J$1.7 trillion, or 130 per cent of the value of all the goods and services Jamaica produces annually. All the Government's revenue services the debt and pays public-sector wages.

Usually, our Government borrows to meet its other expenses. Now, though, money markets won't lend at rates we can afford. Multilateral and bilateral partners refuse to unlock resources in the absence of credible action shifting the trajectory of the debt.

Inevitable tax package

Dr Peter Phillips, the finance minister, is, in the circumstances, forcing the country to start being fiscally disciplined. A tax package of the magnitude of the one for $19.4 billion he imposed a fortnight ago was inevitable.

Much of Jamaica's debt is the result of bad government policies over a long period. Yet, some of the borrowings produced effective outcomes that benefited several sectors, tourism included.

At the same time, tourism has been the beneficiary of a slew of incentives; it pays little in taxes. The rate of the general consumption tax applied to the sector, for example, is 6.5 percentage points lower than other firms and private individuals. Tourism also benefits from taxpayers' promotion of the country.

This time, though, the tourism sector was asked to contribute J$3 billion to the Government's tax package, two-thirds of which would come from room taxes, ranging from US$2 to US$12 per night, depending on the size of the property. The sector baulked. Its leading spokespersons warned of the collapse of the industry.

NEW AGE OF COOPERATION

This newspaper appreciates that no one wants to pay more, or higher taxes. We would prefer if individuals and firms could keep their money to spend, helping to stimulate the economy.

But Jamaica faces a crisis that, if unattended, portends the fortunes of Greece and other countries of Europe that are similarly overburdened with debt. Most Jamaicans understand this. That is why they appeared to grow cynical of the tourism sector's initial posture.

The Government has rolled back some of the hotel room tax. Essentially, it will attempt to recoup the forgone amount, at source, from people travelling to Jamaica. If this works, it won't affect the bottom lines of hotels. We hope it works.

The larger issue is that Jamaica can no longer fudge its fiscal calamity, and no sector can shirk a shared responsibility for fixing it. For our society, as a whole, has historically tolerated fiscal irresponsibility from our governments.

The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.