The president of a Bahamian airline has decried the likely "serious" impact of value-added tax (VAT) on the local airline industry, claiming that the government was "creating a crisis on top of a crisis" through rising costs of doing business and delayed educational programs.
SkyBahamas President and CEO Randy Butler claimed that the implementation of the 7.5 percent tax would put undue burden on local airlines and the wider tourism industry, given the host of taxes and fees already facing SkyBahamas and other local airlines.
"Without thought, [the government] continues to put taxes... and undue fees and pressures on us," said Butler. "Our business license fees increased from 0.75 to 1.25 percent... and terminal fees are now charged per seat, not passenger flown.
"In reality, when you add 7.5 percent directly, what is going to be the cost to implement it?
It's not going to be a push of the button. We have to go out and get the airline's accounting system changed; we have to employ more people to manage that, and the cost goes up to manage that."
With less than six months until VAT's scheduled implementation, Butler feared that Bahamian businesses would not have enough time to successful engage in VAT education programs.
"Our goal is to pay our taxes and to help build the company," said Butler, "But we've got, what, six months to do that? You're creating a crisis on top of a crisis."
VAT will be implemented at a flat rate of 7.5 percent for all sectors, with no broad tariff reductions or good exempted. Wednesday's tabled VAT legislation additionally rescinded previously outlined exemptions for domestic travel.
"VAT will impact us seriously... This is something that the government is not collecting directly from the passenger, so it's something that we have to manage.
"The government, we believe, doesn't quite understand the contributions that the private airlines, and airlines on the whole, do to the development of The Bahamas," said Butler.
Butler also feared that the tax would compound the tourist sector's concerns over airlift by potentially reducing the number of flights into the country.
"Think of what tourism is already [experiencing] with airlift, think of the other challenges... in five months you're going to have at least a 10 percent operating cost increase."
Given the challenges facing the local airline industry, Butler also called for the government to privatize Bahamasair to create a level playing field.
"The government continues to give more money to Bahamasair and subsidize other foreign carriers, which makes it hard for us to exist," stated Butler. "We do not want a handout from the government. We want the government to have a level playing field."

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