The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government is aiming to near-triple revenues earned from departing cruise passengers to $145m in the 2023-2024 Budget via a series of new and increased fees, it was revealed yesterday.

Revenue estimates for the upcoming fiscal year revealed the Davis administration is seeking to increase "sea departure taxes" from $50.642m in the current fiscal year via a combination of increases to the existing $18 per passenger departure tax and two new levies.

The Passenger Tax Amendment Bill 2023, tabled in the House of Assembly yesterday to accompany the Budget, reveals that the existing $18 tax is being increased to $23 for "every cruise passenger" leaving The Bahamas via Nassau and Freeport, and to $25 per head for all those who exit "by sea from a private island not visiting any other port in The Bahamas".

The revised tax structure, while designed to incentivise the cruise lines to call on Nassau and Freeport, and thus better spread the wealth through their passengers spending with more Bahamian companies and their employees, imposes departure tax increases of $5 and $7, respectively. They are equivalent to a 27.8 percent and 38.9 percent rise.

In addition, the Bill will also introduce a "tourism environmental levy for every cruise ship passenger arriving or leaving The Bahamas" worth $5 per head. And, finally, for good measure, The Bahamas is also applying a $2 per head "tourism enhancement levy for every passenger arriving in or leaving The Bahamas".

Combined, these two new levies will add a further $7 in taxes and fees for departing cruise passengers. Depending on whether they exit via Nassau or Freeport, or one of The Bahamas' private islands, this will take the per capita fees and taxes paid to $30 and $32, respectively, representing 67 percent and 77.8 percent jumps.

Many Bahamians, especially the environmental advocates, will be delighted that the Government is seeking to extract greater revenues from a cruise industry to whom The Bahamas' waters and private islands have become increasingly valuable in the post-COVID environment.

The 186 percent, or $94m, year-over-year jump in sea departure taxes is the critical driver behind the projected rise in international trade and transactions taxes to $708.545m in 2023-2024. The departure taxes paid by higher-spending stopover, or air arrivals, by contrast are only forecast to rise by some $6m to $54m because the per capita tax is being held at $28 in the Bill.

However, one source familiar with the cruise industry, speaking on condition of anonymity, told Tribune Business: "The cruise lines are going to have a kitten but anyway. When it comes to the industry, they say they need a year to adjust and roll it out effectively because they have already sold tickets for July 2024."

Reflecting this, the Tourism Enhancement Levy will not come into effect until January 1, 2024, although the environmental levy and increase to the existing fees will take effect from July 1 this year, according to the Bill. "The Bill seeks to introduce a Tourism Enhancement Levy on passengers arriving [in] and leaving The Bahamas to be deposited to the Tourism Development Fund," the legislation stipulates.

That Fund will be established under the Tourism Development Corporation of The Bahamas Act 2023, which was also tabled in the House of Assembly yesterday for its first reading. The Passenger Tax Amendment Bill, meanwhile, states that its reforms are also designed to "introduce a tourism environmental levy and revise existing fees and taxes on departing cruise passengers."

However, this newspaper's cruise source, referring to the deputy prime minister, and minister of tourism, investments and aviation, said: "Chester don't play. The cruise companies are going to go ballistic. Wow. They're taking the departure tax from $18 to $23 for those leaving from Nassau and Freeport, and from $18 to $25 if they leave from a private island.

"Then you have this $5 environmental levy that takes you to $30 for the private island, and $28 for Nassau and Freeport, plus the $2 enhancement levy." Prime Minister Philip Davis yesterday said the Budget contained no new and/or increased taxes, but the Passenger Tax Amendment Bill showed there were still significant adjustments to critical fees.

Kwasi Thompson, the Opposition's finance spokesman, picked up on this theme, telling Tribune Business: "The Government says no new taxes. However, we see a significant increase in communications levies, a new hotel condominium tax, increase in transportation fees, concession application fees, harbour dues, tourism environment taxes. These all must be explained by the Government."

He also argued that the $54.8m forecast reduction in the 2022-2023 deficit, as compared to the last projection, paled against the $300m year-over-year revenue rise that the Government is now forecast to enjoy. Suggesting that this is a sign the Davis administration is having difficulty controlling its spending, Mr Thompson said: "The problem with the Government is their rate of expenditure and the type of expenditure.

"You have added $50m to the public service. This most likely a yearly add. It is also completely unacceptable that, according to their own numbers, an increase of more than $250m [sic; $300m] only equates to a possible $50m reduction in the deficit. Even the reduction by $50m is unbelievable."