Some in the car rental industry want Government to pump the brakes on its proposal to introduce a $10 per day daily car rental levy, saying it could drive visitors away.
The levy was one of the new measures mentioned during Tuesday’s Financial Statement And Budgetary Proposals by Minister of State in the Ministry of Finance Ryan Straughn.
He revealed that Government was abolishing visitor registration permits which was $10 for stays under two months and $100 for two months and introducing a $10 per day car rental levy.
Immediately following that announcement, car rental dealers met with officials of the Barbados Hotel Tourism Association (BHTA), which has already fired off a letter outlining their concerns and requesting an urgent meeting with Straughn.
When the Weekend Nation reached out to BHTA president Ryan Forde, he said he was presently overseas and did not have a comment on the matter at the time.
However, rental dealer Aldo Ho-Kong King told this newspaper recently that their concern was that the levy represented “high taxation”.
“Although this is called a fee, it is a taxation on car rental. So we’re concerned that the car rental pays 17.5 per cent on VAT [value added tax] and there will also be an additional amount, which is $10 a day.
“So when we look at this, it will be one of the highest taxed commodities to customers and, obviously, our customers are tourists visiting the island and that’s a significant issue,” he said.
Eon Gill, chief executive officer of Time Out Car Rentals, is waiting on Government to provide more information about how the tax would be implemented, saying it could spell trouble for car rental companies because visitors already complained that the rental of vehicles was too high in Barbados.
At the same time, he expressed fears it could lead to an increase in car rental pirates.
“The market is very saturated in terms of there are so many people who want to get into the car rental business, but like every other business, it’s what you do that makes a difference, right?
“But you have tourists who come to the island who are aware of what’s happening and once you’ve come to an island many times, you will then realise where you can get deals. So, my point is that it encourages more piracy, even though there’s an amnesty to bring out the illegal car rentals.”
Gill pointed out that with car rental companies having long-term clients from Ross University and the Welcome Stamp programme, among others, whom they have already negotiated business with, the levy “will kill the business even more”.
“Because these people are negotiating, they want a car because they’re looking at the fact that if I can go and lease a car for $700, $800 a month, why would I pay $1 000 a week for a car. But they do not understand the permit alone for the car is $3 500 and then the insurance, because it’s considered commercial, is another $3 000.
“So when you add up the rate for the insurance and the cost for the permit, it is quite expensive. And then you have overheads, you have servicing, you have to renew the road tax every year. It’s a lot of money. Hence why the prices are justified by what we charge.”
He said for long-term clients, the levy could increase their charge by $300 or more.
“That really will kill the market. I’ve seen tourists said they went to other countries and car rental is $30 and $40 a day and when they come to Barbados, they are paying as much as $250 for a car per day.
“To me, this is only further discouraging them to come to our little island and we need tourism and we just don’t need tourism between the months of December to March, April. We need it right through.
“So, to me, I just think that they haven’t thought it through. I don’t mind paying something for the levy but I just think $10 a day is ridiculous.”
A group of small car rental companies also told the Weekend Nation the levy would have a detrimental effect on their business.
“These companies are middle-income families trying to make ends meet. These are single mothers getting an extra income so they can survive. Adding a levy, which effectively amounts to a 6 000 per cent increase on the previous permit, would be devastating to them and Barbados in many ways.”
Pointing out that tourists already contributed significantly to the local economy by supporting attractions, shops, restaurants, craft vendors and filling up with gas and so on, the group said: “We do understand the importance of revenue generation for the Government, but it is a difficult task to ask these people who already contribute so heavily to our country’s economy to fork out an additional $10 a day for their stay. Some have already indicated that it is not palatable.
“The rejection of this is even more prevalent in the important long- stay segment. For a guest who previously stayed and rented a car for two to four months, with the proposed levy [that] would move from $100 to $1 200 extra for their stay.
“Most have already indicated they will not be keeping a car for the full length anymore, if they come at all. These people are being penalised for buying in bulk, essentially, when most businesses incentivise this behaviour.”
They charged that the car rental sector does not get any tax breaks, duty free or special rates on VAT.
“We are dealing with record-breaking insurance rates and significant wear and tear due to tyres and suspensions.
“Based on feedback from our clients, this will not only negatively affect the car rental sector, but Barbados on a whole as guests start looking at other locations for their winter getaways.
“We ask that the Government urgently sit with the entire car rental sector and come up with a better strategy to assist in the revenue generation required,” they said.
