House: vacation rentals update
Zane DeSilva, the Minister of Tourism and Transport, provided an update on vacation rentals in the House of Assembly this morning.
Mr DeSilva said:
This House will recall that the Throne Speech included a short section on the issue of tax relief for vacation rental properties.
I will now provide a detailed explanation of the reasons this Government will seek to amend the Tourism Investment Act to implement a fair and equitable approach to the provision of tax relief on all vacation properties.
This House will understand that the tourism sector, and more specifically vacation accommodations, is an increasingly competitive market. 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 recognises, Bermuda must be competitive with other destinations. 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.
The tourism sector is in a constant state of flux, and 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 penalising 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.
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.
And this brings me to another point, and this is the widely held misconception that the tax is directly on the owners of Vacation Rentals. I want to take this opportunity to dispel this misconception once and for all; this simply is not true.
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, 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 criticise 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 emphasise 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.
Another issue that some have subsequently raised concerns 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.
To that, I would respond that 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.
On a broader level, 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 minimises unnecessary bureaucracy with the intent of getting as many Bermudians as possible into the market.
In closing, I would like to state that I am honoured to be a member of a Government which is committed to creating a better and fairer Bermuda for all.