“A sudden, drastic increase… is not in the best interest of St. Maarten.” Timeshare Association suggests $7 per night fee and impact study

POSTED: 07/6/12 11:59 AM

GREAT BAY – The St. Maarten Timeshare Association (SMTA) has suggested that the weekly tax of $50 that timeshare owners pay be changed into a daily tax of $7.00 instead of proceeding with a proposal by the United People’s (Up) Party faction that would send the tax from $7.14 a day to $10 a day. The proposal was formulated by the Timeshare Advisory Council and released yesterday in response to the Up faction’s submission of a draft initiative law that will change the fee structure at timeshare resorts.
“While the SMTA is pleased with the draft initiative law presented by the UP Party to change the timeshare user’s tax to a daily rate from a weekly rate of $50, a sudden, drastic increase from under the current tax is not in the best interest of St. Maarten. St. Maarten’s tourism, like tourism around the world, is just starting to recover from the effects of the recession. With the world economy teetering on the brink of another downturn raising taxes as proven already in Europe invites a severe downward economic spiral affecting the lower income earners soonest and most drastically,” an SMTA release states.
Later the release states, “The SMTA believes that it can be considered as dangerous to the well being of every St. Maarten citizen to risk a negative tourism backlash from such a sudden increase. Before raising the fees, several factors must be considered: St. Maarten’s maintenance fees are higher than our competitors due to significantly higher electric and water costs as well as higher wages; upgraded timeshare consumer legislation, while in the works is not yet before Parliament; the St. Maarten Tourism Authority has not yet been formalized and a decision has not yet been made how tourism product development will be part of that; and significantly no study has been made of what such a large tax increase will do to our tourism.”
While the SMTA agrees that something should be done quickly they also believe there is a need to conduct a “proper” study determining the actual impact to the government’s coffers and the timeshare industry as a whole. They also believe that increasing the tax is not quite the right way to go if government wants to increase revenue.
“Increasing timeshare and other tourism will generate far more government revenue than this tax increase, which could have the opposite effect. The SMTA believes that any tax increase must be properly studied before applying since what may have been proposed with the best intentions could end up harming an industry that has proven to be a savior in times of economic downturns and other crises,” the SMTA’s release states.
Historic Support
The SMTA’s support for switching to a daily fee instead of the current weekly rate is years old. In 2002 and 2003 the SMTA met with and made an agreement with the Executive Council to change the weekly timeshare tax to a daily one to reflect the increasing flexibility of timeshare usage with points based programs allowing usage in nightly increments. This change was never implemented. Average stays in St. Maarten in these programs is 10 nights compared to 6 nights for hotel stays. At that time, when Sector Director for Economy and Tourism Diana Fleming chaired the Timeshare Advisory Council, the SMTA agreed to raising the tax to $8 per night with $1 going towards the funding of the privatization of the Tourism Bureau when that occurred. The $8 fee was studied and a formal recommendation of $7 per night was sent back to the Executive Council pending the formation of a restructured tourism organization. The reasoning was that the timeshare tourism was too important to risk by implementing higher taxes.
“What was true then is true now,” the SMTA release states.
The timeshare association also believes that it is important to also look at what other popular destinations have done in recent years. They cite the example of Hawaii – the only destination in the United States with a timeshare user tax – where the average daily tax equates to approximately $5 per day. In 2011 a proposal to increase the tax was aborted because timeshare owners and their guests are “dependable, consistent, and stable visitors who bring substantial tax dollars to Hawaii and continue to come even during economic downturns.”
“Timeshare accounts for 70% of our stay-over tourism based upon figures supplied by SHTA and verified by SMTA. A recent report from the Central Bank shows clearly that St. Maarten’s Gross Domestic Product is linked directly to stay-over tourism. While cruise tourism has increased, there is no direct linkage between this and GDP according to the Central Bank statistics,” the SMTA points out.

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