The recent announcement of the introduction of a 14 per cent Value Added Tax (VAT) on local airfares has been met with public outcry, as persons across the country, including businesses and citizens, have bemoaned the impact this would have, not only on travel but on tourism.
Many operators who have been in business for decades have voiced their concern over the implications this will have on their customers, primarily on tourists, miners and persons utilising the services from hinterland and far-flung areas. Undoubtedly, the cost of travel to and from the interior will increase and this is a cost which operators have to pass on to their customers. Although hinterland residents have been exempted from paying the tax, one of the concerns raised is the issue of identifying who exactly the residents of the interior are. This will be difficult for the service providers to ascertain. Another area of concern was who bears the cost if a passenger is deemed unacceptable for the exemption. Would this burden be foisted on the airline or service provider? In the absence of criteria from the Guyana Revenue Authority, other operators are positing that they will then have to charge every passenger VAT on their airfare. Then, there is the issue of bookings which have been made some time ago. The President of the Tourism and Hospitality Association of Guyana (THAG), Andrea De Caires said the VAT on domestic airfares would severely impact tour operators who now have to deal with the implications on bookings made some time ago.
According to reports, although THAG has since appealed to Government for a 60-day grace period or they would have to absorb the VAT, the body is concerned about tours and trips which have already been sold, as they now have to approach those customers to inform them of the 14 per cent charge, or they will have to absorb the cost which means operating at a loss. The primary concern of service providers is that the VAT on domestic tickets would affect passengers and customers and would result in market shrinkage and less money to cover operational expenses and debt servicing. The previous Tourism Minister, Cathy Hughes, two years ago, had announced that domestic tourism was important to the new Administration and international visitors, while she acknowledged that many persons currently living in Guyana have visited other countries, but have never set foot in the hinterland. In the past, she had assured of the Government’s sharp approach in developing Guyana as a must-see tourist destination. Hughes then explained that it was the aim of her Ministry to look into this situation and try its best to provide a solution to the issue of Guyanese being unable to travel around their country. Additionally, Indigenous People’s Affairs Minister Sydney Allicock had asserted that his Ministry will be working closely with the Tourism Ministry so as to assist the hinterland communities to realise their true potential, as it relates to community-based tourism, which is intended to attract more domestic tourists.
However, the introduction of VAT will undoubtedly affect domestic tourism and could make local holidays unaffordable, although the VAT on airfares is unlikely to stop people from travelling; it is more likely to result in a shift in consumer choices. The high cost of domestic tourism has kept it beyond the reach of wage-earning Guyanese, a circumstance that has inevitably led to product promotion that targeted visitors almost exclusively. Even as the tourism officials pledge to promote domestic tourism, there simply is no plan in place to make it more affordable. Travel to tourist destinations in Guyana, much of which must be done either by air, sea or long, sometimes overland treks means substantial investment in aircraft, pilots, aviation fuel, gasoline, speedboats and buses. The journeys are often relatively short, but the logistics involve heavy investment. With the implementation of VAT on local airfares, it seems as though the drive to promote domestic tourism has been halted.
