The proposed $10 per day charge on the rental car sector has drawn sharp criticism from Independent Senator Andrew Mallalieu, who fears the measure could push legitimate businesses underground.
During Wednesday’s debate on the government’s Financial Statement and Budgetary Proposals in the Upper Chamber, Senator Mallalieu, who disclosed his own financial investment in a rental car company, called for the Mia Mottley administration to revise the tax.
Mallalieu argued that the rental car sector is uniquely disadvantaged, being the only direct tourism service that does not receive state concessions. He expressed concern over the significant increase in revenue the government expects to generate from this new tax.
“This $10 per day being added to the rental cars, I would now like to give an estimate so we can compare what we are talking about removing,” Mallalieu stated. He estimated that the government currently collects approximately $300 000 per year in license fees from visitors renting cars.
“Ten dollars per day, 6 000 rental car permits. A rental car permit, to get one, costs $3 500 the first time and it costs $1 000 every time you change that car. So generally, about every three years, they would change the car. But just going on the average rental across the industry, that $300 000 is going to $14.4 million. With 6 000 rental cars with an average occupancy…and we know how many times they are rented, and it’s at $10 per day it’s rented,” he elaborated.
The senator further highlighted the tax burden on the rental car industry. “To give you an idea in percentage terms…the average daily rate for rental cars in Barbados is about $80 per day. When you add $10 per day, you are adding 121/2 per cent to that cost. On top of that, there is a 17.5 per cent VAT. So, for every rental car, there is a 30 per cent tax that government is going to collect. Plus the fuel tax.”
Mallalieu also pointed out a potential issue with existing contracts.
“It is that you have people who have rented cars,” he explained, “and you have contractual obligations for the next nine to 12 months. So, that is going to have to be addressed because you have fixed prices on that. How you add a tax after the fact is…we have had this before, so I am sure we will figure it out.”
He lamented that Barbados already has some of the highest rental car costs in the region.
“We cannot afford to become uncompetitive in this area. This is just unnecessary. I cannot see the justification for moving from $300 000 a year in revenue to $14.4 million,” Mallalieu argued.
He stressed the lack of concessions for the industry, noting, “They pay everything. There is no concession for this.”
Addressing the issue of unregistered rental car operators, Mallalieu expressed skepticism about the government’s ability to enforce regulations.
“I am not aware that there has ever been a single instance, that a private operator has been brought to justice on this. There has not been one instance to date. So, maybe in the future, we are going to see a lot of it. Maybe not. My fear is that all we will do with this tax, is that we will drive legitimate hired car operators underground because it will make them uncompetitive,” he warned.
Concluding his remarks, Mallalieu urged the government to reconsider the tax. “I do encourage government to consult with the industry, recognise that it pays full duty on the cars, recognise it pays full VAT, and recognise the difference in the revenue and perhaps revisit it, which I am sure a reasonable government will do.” (EJ)
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