The Caribbean Hotel and Tourism Association (CHTA) warned yesterday that the elimination of tax incentives would have long-term negative consequences for the Caribbean tourism sector.
According to the CHTA, these incentives are crucial to offset the region's high operating costs and attract significant investment.
“Tourism remains the economic engine of the Caribbean, benefiting not only hotels, but also local farmers, fishermen, and artisans. Tax incentives have allowed businesses to invest in growth, create jobs, and contribute to the overall economy,” the organization said in a statement.
The organization referred to the general situation in the Caribbean, but emphasized the Fiscal Modernization Bill, presented last Monday in the Dominican Republic.
“The Dominican Republic’s proposed tax reform seeks to replace a successful incentive structure with broad tax increases, which could undermine tourism’s role as a key economic driver. The country’s rapid recovery after the pandemic, driven by hotel renovations and new investments, demonstrates the benefits of maintaining these incentives. In 2022, the tax incentives cost the government US$138 million but generated US$763 million in tourism-related taxes—a 5.5-fold return—and US$1.05 billion in foreign direct investment, illustrating a 13-to-1 multiplier effect,” they stated.
The CHTA president spoke about the importance of tourism for Caribbean economies and emphasized the importance of incentives to maintain momentum.
"Tourism is more than an economic engine: it is the backbone of our economies," said Sanovnik Destang, president of the CHTA.
Agewgó said that “reducing incentives without mitigation measures could destabilize recovery efforts. We must continue investing in infrastructure and service sectors to sustain tourism growth.”.
Destang emphasized: “Tourism thrives not only on natural beauty, but also on the ability of businesses to invest in improvements. Removing tax incentives without performance-based alternatives risks undermining those investments, especially as global competition increases.”.
Impact on economic development and employment
The CHTA recognizes the fiscal challenges facing Caribbean governments in the wake of the COVID-19 pandemic.
However, it highlights that tourism has been a key driver of economic recovery, restoring jobs and government revenue faster than expected. Eliminating tax incentives without alternatives could stifle growth, reduce competitiveness, and limit job creation.
Tourism in the Caribbean generates foreign exchange when international visitors spend on local goods and services. Taxing inputs such as infrastructure and hospitality would increase costs and reduce competitiveness, encouraging tourists to choose cheaper destinations. Incentives are essential to sustain growth and improve service quality.
"While infrastructure investments support a stable environment for both residents and visitors, removing tax incentives for tourism without offering alternatives risks slowing growth, reducing competitiveness and limiting job creation," the CHTA statement explains.
The organization urges governments to adopt a collaborative approach when designing fiscal policies, consulting with tourism stakeholders.
This partnership will foster long-term growth, expand local participation, and increase tax revenues. The CHTA is also prepared to work with institutions such as the IMF and the World Bank to create frameworks that support tourism growth and meet fiscal needs.
