Leading tourism sector representatives are criticizing the Medina administration’s taxation increase proposals during the opening of the Dominican Tourism Forum (Fodatur) organized by the Dominican Competitive Tourism Consortium (CDCT) that is taking place at the Dominican Fiesta Hotel.
Luis Emilio Rodriguez Amiama, president of the Dominican Republic Hotels & Tourism Association (Asonahores) asked how much more taxes will tourists and tour operators be willing to pay to visit. He stressed there are hundreds of places with beautiful beaches and quality accommodations.
Rodriguez warned the additional taxes would make it more difficult for the country to compete with regional giants such as Mexico. He said that all-inclusive hotel packages here are already 29% more expensive than in Mexico.
Rodriguez addressed the costs that make the DR less competitive than Mexico. He said that hotels here have to pay on average US$0.22 per kWh, while in Mexico the cost is US$0.12. Taxation in the DR is 45% higher than in Mexico. He went on to say that the social benefits per employee are 46%, compared to 38% in Mexico.
He complained that while ITBIS here is 16% [the government is proposing to increase it to 18%] in Mexico tourists pay only 11%. He also pointed out that aviation fuel here costs US$4.30, while in Mexico it is US$3.69. He said that this means that a Boeing 747 flying from Europe to Cancun will cost US$5 million less a year than to Punta Cana.
Rodriguez says that these figures reveal why construction of new hotels and tourism projects is at a standstill in the DR, while growth continues in the Mexico.
Rodriguez argued that for every RD$100 tourism contributes to the economy RD$23.70 goes on taxes. He said that the RD$23.70 paid in taxation does not include other costs, such as social security that companies pay, the 10% legal tip.
He said that tourism receipts represented more than RD$154 billion and the fiscal contribution was RD$35.59 billion. Taxes on tourism represented 14% of total government tax revenues overall. He said that for every tourist, the government received on average RD$8,360 (US$235) in taxation revenues. This is the calculated on the base of 4,124,543 visitors in 2010.
Rodriguez said that the taxation privileges the sector receives are another exaggeration on the part of the government. He said that fiscal incentives in 2010 were RD$1.19 billion, barely 1.2% of the RD$110 billion in taxation exonerations to other sectors, including ITBIS not collected on food products.
Rodriguez said that these are difficult times and the taxation bill will only make things harder for tourism business owners. “If we affect competitiveness to the level the proposed taxation would have an impact, we can forget all those ideas we had dreamed about basing development of our communities on tourism,” said Rodriguez.
Speaking at the same event, Rafael Blanco Tejera, president of the Dominican Tourism Competitiveness Consortium urged the government to adopt a realistic and stable tax structure that backs competitiveness for achieving the Medina administration’s growth goals. The Medina administration has proposed reaching the 10-million tourist mark with 800,000 jobs in the next 10 years. Blanco said that this goal would transform the country’s economic map by bringing prosperity, jobs and development to depressed areas. “But to achieve this, we need a taxation structure that is in line with the goal,” he said.
He said that the fiscal reform proposal currently being studies in Congress should result in an instrument that boosts the potential of tourism and other productive sectors.
http://www.asonahores.com/noticias/2012/11/asonahores-dominicana-paga-45-mas-de-impuestos-que-mexico.aspx