Reaffirming Government’s commitment “to ensuring that Bermuda stays at the forefront of changes and transitions in the tourism sector”, Tourism Minister Zane DeSilva explained the reasoning behind proposed amendments to the Tourism Investment Act, to provide tax relief to vacation property owners.
In a bid to implement a fair and equitable system, he told MPs the amendments are designed to keep Bermuda “competitive” as a tourism destination, “without penalizing an important element of our available bed inventory”.
In a Ministerial Statement delivered in the House on Friday, Mr DeSilva said”Discerning tourists are driving this sector with an increasing demand for value across all available accommodations.
“In order to take advantage of the full cross-section of tourist economics, destinations must offer a similar cross-section of accommodations to suit tourists’ budgets.
“This is about competition. As this Government recognizes, Bermuda must be competitive with other destinations,” said the Minister.
“The tourism sector, which is a vital contributor to Bermuda’s economy, must be at the forefront of transitions and changes in the demographics and economics of our targeted audience.”
While noting that Bermuda’s tourism sector “is in a constant state of flux”, he said: “It is true to say that if ‘you snooze you lose’!
“This Government is committed to ensuring that Bermuda stays at the forefront of changes and transitions in the tourism sector. Therefore, Government will seek to amend the Tourism Investment Act to remain competitive without penalizing an important element of our available bed inventory.
“The background to this matter started with the introduction of a Visitor Fee on tourists who stay at Vacation Rentals which is consistent with the Visitor Fee imposed on tourists who stay in our hotels,” he added.
“The Visitor Fee does not directly affect the owners and operators of Vacation Rentals, it will encourage more homeowners to invest and add beds to Bermuda’s inventory.
“I would also like to take this opportunity to reaffirm this Government’s commitment to minimal regulation of Vacation Rentals.”
Addressing what he termed “the widely held misconception that the tax is directly on the owners of Vacation Rentals”, the Minister also took the opportunity “to dispel this misconception once and for all”.
“This simply is not true,” said Mr DeSilva.
“We seek to balance the need to protect our visitors who choose the Vacation Rental option while avoiding red tape, bureaucracy or other impediments that might deter Bermudians from entering into or continuing on this growing facet of our tourism economy.
“In order to create an equitable marketplace, this Government has committed to develop options that allow some relief to be available to the owners of Vacation Rentals similar to that which is available to hotels.
“This Government understands that this is a complex subject, and it will undoubtedly require a consultation period with key stakeholders; however Mr. Speaker, be assured it is being driven by this Government’s recognition and desire for a more fair and equitable approach on this matter.
“Some in the wider public audience may criticize this initiative because of a misplaced conception that Vacation Rentals will remove affordable housing from the local market.
“To this I would respond that:
- Firstly, a property under rent control cannot be placed in to the Vacation Rental market if it displaces renters.
- Secondly Mr. Speaker, this House will recall that a new initiative was announced in the Throne Speech relating to the Bermuda Housing Corporation and the construction of residences in the City of Hamilton which will provide affordable one-bedroom and two-bedroom apartments for rent or purchase.
“This will meet this Government’s mandate of putting independent living within the reach of Bermuda’s young people who wish to purchase a home or seek independence by moving out of the family home.
“I do not need to emphasize the high priority that this Government has always had on the provision of affordable housing. The Vacation Rental initiative clearly upholds this Government’s support for all Bermudians.”
On the possibility that “owners of Vacation Rentals may falsely claim tax relief on materials imported to Bermuda that do not end up in the Vacation Rental”, he said the “appropriate safeguards will be included in the Tourism Investment Act to ensure eligibility for the grant of tax relief”.
“Following the consultation period, this Government will ensure that detailed and specific requirements will be implemented to prevent any potential for abuse of the tax relief system,” he said.
On a broader level, he added: “The realignment of the Tourism Investment Act which this Government will now seek is consistent with the ‘light touch’ regulatory adjustment process which has been adopted by this Government and which minimizes unnecessary bureaucracy with the intent of getting as many Bermudians as possible into the market.”