SUPERCLUBS boss and hotel patriarch John Issa is calling on the Government to enforce greater compliance efforts rather than overburden the tourism industry with increased taxes.

Speaking at the presentation of the findings of the study, “Travel & Tourism as a driver of economic development in Jamaica,” commissioned by the Jamaica Hotel & Tourist Association (JHTA) and executed by Oxford Economics, Issa said: “Jamaica’s fiscal deficit has not been created by the lack of levels of taxation. All statistics show that 45 per cent of income that should be taxed are not, so it is really a tax compliance matter and that is well known to thinking people in Jamaica over the decades. It is not something new. There is direct knowledge of it by those who sit in Parliament and set the tax rates. That is the cause of our debt-to-GDP ratio and our annual fiscal deficits, it has nothing to do with the tax rates.”

The Government is faced with a J$1.6-trillion debt moutain, an income per capita of US$4,500 and a yawning fiscal deficit. The IMF is pressuring it to collect more tax revenues and to reform the tax and pension system as well as address public sector wages. With tourism being both the main foreign exchange earner and the leading economic driver of the country, the Government may well be looking to extract more revenue from it.

The presentation took place at the Jamaica Pegasus on Tuesday afternoon. Adam Sacks, founder and Managing Director of Tourism Economics, at Oxford Economics while presenting the study’s findings, declared that tourism has the largest impact to Jamaica’s sectorial GDP at around J$225 billion. It also drives 15 per cent of all construction, 10 per of the finance and banking sector and 20 per cent of manufacturing. He said that for every tourism dollar, manufacturing receives 26 cents. Tourism also drives 21 per cent of both utilities and agriculture and fishing.

He further added that in 2010 tourism contributed J$38 billion in taxes which was 20.4 per cent of all government revenue. “Tourism is Jamaica’s number one export sector and is the core driver of the Jamaican economy. Its linkages to the rest of the economy are strong, extending its total economic impact to 19.5 per cent of GDP.”

He further pointed out that the hotel sector has a relatively high tax burden in comparison to regional comparisons. Sacks maintains that the incentives offered to the industry have been an essential part of maintaining growth while they remain generally less generous than those offered across the Caribbean. He declared that when factoring in linkages, the tax contribution of tourism is greater than any other industry and greater than its contribution to GDP.

“Tourism is an export industry and should be treated accordingly. Jamaica does have a challenge on its hands with the fiscal deficit and its debt. The point that this research makes is that changes to the tax structure of tourism in Jamaica should be done very carefully. I don’t think it necessarily floats that there could be no new additional taxes. I think any changes have to be made very carefully with eyes open to not only how important this industry is to GDP and tax generation but what the competitive landscape is. So with those things in view, hard choices have to be made, but they must be made on an informed basis,” said Sacks.

The Government must be careful not to kill the goose that lays the golden egg, and the tourism sector is a powerful lobby group. It may argue that the tourism sector should adopt the JFK aphorism “Think not what your country can do for you, but what you can do for your country,” as it tries to generate more revenues while at the same time appeasing the IMF. It has often been said that tourism provides the best hope for Jamaica and to overburden it with taxes may prove counter-productive.

“If the Government wants to close the widening fiscal deficit it must collect from those who are evading paying their taxes. Read the campaign manifestos of successive political parties going back 30 years, every one of them says we are going to improve compliance. If you don’t start doing this you will never get there,” said Issa.

The president of the JHTA Evelyn Smith added: “If we have an issue in the country where there are those not paying taxes, then there are many who will take exception from there having to be tax increases when you do not see significant tangible efforts to go after those who are not paying their rightful share of taxes. We do not think the government should place additional taxes on the tourism industry.”