Raising the Tourism Goods and Services Tax (T-GST) to 16 per cent from 12 per cent effective next year would significantly impact Maldives’ tourism performance, particularly at a time when destination competition is intensifying post-lockdown, said industry stakeholders.
Abdulla Ghiyas, president of the Maldives Association of Travel Agents and Tour Operators (MATATO), said the government’s decision to raise taxes “is not a wise move”, stating that businesses would be “severely affected” as Maldives is already “a pricey destination and airfares are also increasing”.
His views were echoed by Mohamed Khaleel, CEO of Pulse Resorts and CEO of Manta Air, who noted that the government has not done a proper evaluation of the situation.
Khaleel told TTG Asia: “We had good tourism growth but that was when other destinations were closed due to the pandemic. Now the world is opening (up), including our competitors like Mauritius, Seychelles and Zanzibar, which have beaches as beautiful as the Maldives.”
On July 5, finance minister Ibrahim Ameer not only announced the increase in T-GST, but also the general goods and services tax (GST) – which covers the domestic sector – from six per cent to eight per cent in 2023. The T-GST covers all goods and services provided by the tourism sector, including resort supplies, travel agency services, and domestic air transport for tourists.
The T-GST was first introduced at 3.5 per cent from October till December 2011. It was adjusted to six per cent in January 2012, eight per cent a year later, and then 12 per cent in November 2014.
The tourism industry has repeatedly raised concerns over the tax increment, saying it makes the destination costlier.
In a separate statement, MATATO said this may not be the optimal time to implement tax increments, and that the full implications should be taken into consideration, including its impact on the nation’s primary revenue generating sector: tourism.
Tourism accounts for 74 per cent of the gross national income and should be properly accounted for. As all the competing beach destinations have opened their borders, it is important to stay competitive, it said.
“Any price increases will magnify the existing negative impact of fuel increases on operations, air travel, and, most of all, demand for the Maldives’ products,” MATATO noted.
Philippine president Ferdinand Marcos, Jr has directed regional offices of the Department of Tourism (DOT) to work with their respective local government units to determine the extent of damage, and extend assistance to tourism-related establishments (TREs) affected by Wednesday’s earthquake.
The DOT’s infrastructure arm, the Tourism Infrastructure Enterprise Zone Authority (TIEZA), has also been tasked to explore support specifically for cultural and heritage sites impacted by the earthquake.
Initial reports note that at least two churches, declared National Cultural Treasure by the National Museum of the Philippines, are affected while several heritage and ancestral houses also sustained notable damage.
Other impacted tourism sites include the Vigan Cathedral in the Heritage City of Vigan in Ilocos Sur; multiple ground faulting in the popular Santa Ana Beach Area; and Lafaayette Luxury Suites Hotel and Crown Legacy in Baguio City.
Two properties managed and owned by TIEZA sustained damage as well. The riprap and ceiling of the Banaue Hotel and Youth Hostel in Ifugao partially collapsed, according to an initial report by the agency.
The quake also brought down the ceiling in the fireplace and lobby area of Mt Data Hotel in Bauko, while several hotel decorations were also damaged.
According to TIEZA, bookings for both impacted properties will be cancelled until a thorough assessment has been made.
DOT secretary Christina Garcia Frasco said in a press statement: “My concern and sympathy are one with those who have been affected by the recent earthquake in Northern Luzon. The Department will extend whatever help it can to tourism stakeholders and establishments that have been directly affected by this incident.
“Our resilience as a nation has already been tried and tested in the past. I am certain that this can be strengthened by the essential collaboration between our national agencies, local governments, and crucial stakeholders as we conquer our challenges.”