As of the May elections in the Dominican Republic the GST or ITBS as it's know on the island has been raised from 14 to 16% and must now be added to all transactions taking place in the Dominican Republic. This now includes hotel bookings, User Fee's, Food and Beverage and tours or Excursions.

The Powers at be here on the island have proclaimed that as a result of the bad monetary policy of the previous administration, surging oil prices, and a severe decline in the value of the currency, they have no choice but to not only increase the GST from 14% to 16% but also charge it where previously they have not. Normally the tourism industry has been spared the reactionary policies of the Islands government but this time we are the focus.

As a group, the Dominican Hotel Association, of which we are a part, in conjunction with international tour operators is protesting this fee hike adamantly. It is our opinion that this value added tax will actually have the opposite effect of the government's desire. Increased costs will reduce the competitive structure of the Dominican Market. This will drive price sensitive consumers to other less expensive markets and revenues will fall.

It is our feeling that pressure from the industry will eventually have some effect but for now they are aggressively collecting taxes from all sectors of the economy trying to recover from the past governments mistakes.

As most members have deposited weeks and reserved their accommodation for this year, this will not affect you until next year. With luck the tax will be repealed before then.

Regards,

Gordon Gannon