Short stay visitors to pay $8 per night Disaster Contingencies Fund tax
This countryâs disaster Contingencies Fund will receive a boost in 2018, through an $8 per night levy, which will be implemented on hotel, guesthouse and short-term apartment stays.
The fund was set up last year with the aim of having money at hand to supplement disaster relief efforts, but the International Monetary Fund (IMF), in their most recent Article IV report, urged the Government to take even greater steps to ensure that sufficient resources exist to respond quickly to disasters or build resilience against their impact.
Delivering his budget address on Monday, Minister of Finance Camillo Gonsalves said that the government anticipates that this new levy will generate an additional $1.7 million for the Contingencies Fund.
âThis is a 15 per cent increase in the local capitalization of the Contingencies Fund, which is now predicted to accumulate roughly $13 million in 2018,â said Gonsalves.
The Contingencies Fund is also funded by the one per cent increase in Value Added Tax, which was introduced last year.
The Finance Minister said that the $8 levy that hotel guests will have to pay is one way of easing some of the burden off Vincentians in relation to providing for the Contingencies Fund, while the Government has earmarked US$5 million of its new US$67 million World Bank International Development Association (IDA) 18 allocation to a Catastrophe Deferred Drawdown Option (CAT DDO).
The (CAT DDO) is a contingent credit line that provides immediate liquidity in the aftermath of a natural disaster, Gonsalves explained.
The Finance Minister said in the aggregate, those weather events since 2002 have caused loss and damage in excess of $1 billion, or more than half of our current nominal Gross Domestic Product (GDP).
âWe have lost more to storms and droughts than we have spent to build the Argyle International Airport (AIA). In a post-crisis decade of low and slow growth, the average annual loss and damage from weather events is roughly 5 per cent of GDP,â Gonsalves said.
âMore than 15 per cent of our accumulated debt since 2010 is directly attributable to post-storm reconstruction, as well as our attempts to âfuture-proofâ our country and people through forward-looking adaptation and resilience-building efforts….
âThis year, over 30 per cent of the 2018 capital budget â a total of $71 million â is allocated to climate change preparedness, reconstruction and renewable energy. That total does not include the $12.7 million that we intend to collect to further capitalize the Contingencies Fund. If ever you needed an indication of the way that climate change has affected the developmental progress of our country, or of the national commitment to our green goals, look closely at the 2018 capital budget,â stressed Gonsalves.
He said that when it comes to national disasters, it is not a question of âifâ we will be struck, but âwhen,â and how hard.