Minister of State for Finance Michael Halkitis said he is a "bit surprised" at the reaction to the government's decision to implement a processing fee for private aircraft flying into The Bahamas. In fact, he feels it is "reasonable". "We think that's eminently reasonable.
We don't think that it is unreasonable to ask private aircraft flying into The Bahamas to contribute to the cost of processing that entry," he told reporters outside of the House of Assembly yesterday.
"In fact, I'm a bit surprised at the reaction to it. We believe it's a modest fee that's being placed on each aircraft."
Effective July 1, The Bahamas announced another customs tax on small private planes of $50.
While Halkitis said it's "regrettable" that some people may be offended because "they didn't get notice", he stressed the need for the financial burden to be shared when taking into account the country's current economic climate.
"We introduced a processing fee of $50 per aircraft. For example, for someone who is flying in a private aircraft, they will pay customs a $50 fee to process their entry into The Bahamas. That's per aircraft," he said.
"In The Bahamas, we not only have to provide for the Lynden Pindling International Airport (LPIA) but we have to provide for airports in at least 21 islands.
There are multiple airports on these islands." "We have to make sure that they are safe, manned by competent personnel, are clean and that customs and immigration are there. We believe that if we asked for a modest fee of $50 per aircraft, that's reasonable.
"Overall, our message in this budget has been that the country is growing. We have to provide a lot of services. If we are going to do that, we are going to have the share the cost of doing it because we want it to be done in a reasonable manner," he added.
This recent decision has not been sitting well with some aviation industry insiders.
Jim Parker, president of Caribbean Flying Adventures, a leading online pilot's guide for The Bahamas and the Caribbean, warned that The Bahamas stands to lose anywhere from $16-20 million in revenue annually if the government does not revisit the latest taxes being imposed on that sector.
"It will hurt the tourism sector and reduce tax revenues as well. The bottom line is that government revenues from private aviation tourism will decline rather than increase as a result of this ill-advised action," he told Guardian Business this week.
"Any trained economist will confirm that the extra $50 is going to be more than offset by a loss of revenue to the tourism industry and the government taxes on those revenues as pilots stop flying to The Bahamas. I think any economist that is looking at this situation holistically would have told the policymakers that this decision would be shooting themselves in the foot. For the sake of $2 million, conservatively they are going to lose $16-20 million in the tourism sector. It's a bad decision that needs to be reviewed."
There are approximately 40,000 private flights a year from the United States to The Bahamas that spend an average of $4,000 to $5,000 per visit, resulting in anywhere from $160 million to $200 million in annual revenue.
Halkitis remains confident that the fee is necessary and the country's tourism sector will not experience a major fallout as a result.
Click here to read more at The Nassau Guardian
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