The Palau Chamber of Commerce (PCOC) urges the Olbiil Era Kelulau (OEK) to lower the occupancy tax rate, to ease the additional tax burden the proposed Comprehensive Tax Reform Act COVID -19 could pose on hotels.
In a letter to Sen. Rukebai Inabo, Chair of the Senate Committee on Ways and Means, the Palau Chamber of Commerce officers said while they back the tax reform, the occupancy rate should be no more than five percent.
The organization said the tax reform is expected to increase prices of fuel electricity, water, imported goods and food, wages, alcoholic beverages, bottled water, environmental taxes, and increases to shipping, which will affect the industry’s base operating cost, reducing companies’ profit margin.
“Our nation’s hospitality industry is indeed going these very challenging, troubled times, and we, the owners, managers, and operators, hereby plead for the Palau National Congress, the most-respected Olbiil Era Kelulau, to consider our proposed lower rate of the Occupancy Tax as presented today,” the group stated.
“Therefore, to allow the accommodation providers – the hotel industry, and Palau’s tourism as a whole, the opportunity for a doable economic recovery, with the Government joining the Private Sector on a less difficult road to jumpstart and continue a hopeful and efficient economic recovery into the future.”
Under the proposed tax reform, hotel rates all have to increase, which the organization said could discourage tourists and investors.
Citing the travel bubble between Palau and Taiwan, the organization said the high cost of travel here was a contributing factor to the sterile corridor not attracting tourists from Taiwan.
“We are concerned the rising costs will result in increasing prices, that will cause fewer customers (tourists), and result in a loss of net tax revenue collected from the tourism industry,’ the letter stated. ( B. Carreon)