Antigua: Sandals property to close for five months

Antigua: Sandals property to close for five months

Antigua Observer:-Prime Minister Gaston Browne has addressed the planned five-month closure of the Sandals Grande saying he does not think its related to the Antigua and Barbuda Sales Tax (ABST) dispute with Sandals Chairman Gordon ‘Butch’ Stewart.

Browne, who is off island at a conference, said talks have been requested with Sandals on the matter.

Below is his full response to Observer Media on the planned Sandals Grande closure

“I don’t think it has anything to do with the ABST dispute.  That’s a settled issue. It was immoral for Sandals to hold on to trust money collected on behalf of the state.  There is no way they could have justified that.

Another demand was made recently by Sandals for the Cabinet to waive the duties and taxes on food and beverage.  This request was deferred considering that the other hotels would have made similar demands resulting in a significant reduction in tax revenues.

It was explained to Sandals officials that the government’s finances are in a very precarious position, and that if we waived duties and taxes on food and beverage, it would plunge the government’s finances into a crisis.  This is particularly so, considering that we just gave up over $35M by abolishing Personal Income Tax.

We undertook to review the request in 12 months.  It would appear that this decision was not to their satisfaction and that the closure is a play for additional concessions.

We do not wish to have an acrimonious relationship with Sandals, and we have requested a discussion with its Chairman, Gordon Butch Stewart to resolve the issue amicably in the interest of all stakeholders.

We trust however that Sandals understands that the government, workers and suppliers of goods and services are all stakeholders, and must share equitably in the economic gains from their investment.  Closing the hotel for five months will be self-defeating.

I am told to that Social Security conducted an audit of their books without giving adequate notice.  That certainly would not have risen to the level for this type of action.

In so far as my personal relationship with Butch, to my knowledge that remains good after we settled out differences over the ABST issue last year.

You can be assured that my Government is standing firmly with the employees and the people.  We are a resilient people who are not unaccustomed to challenges.  This too shall pass. At the end of the day, everything will be alright.”

Asked further whether the Sandals Grande closure combined with the anticipated negative impact on the citizenship by investment programme revenue from the withdrawal of the visa waiver by Canada would lead to a review of the government’s budget, Browne said: “We had a balanced budget for the past two years due to the increase in revenue and fiscal prudence.   In the circumstances, we are likely to run a deficit and would have to borrow to fund the deficit”.

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2 Comments

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    August 3, 2017 at 10:19 am Reply

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  2. Checkmate Inc.
    August 9, 2017 at 12:40 pm Reply

    9th August 2017

    Antigua and Sandals Dispute
    I just listened to the entire address of Prime Minister Gaston and commend him for finally taking action to protect Antigua and Barbuda and its people from further exploitation from Sandals. But I noticed some of the comments by persons with respect to the interaction of Beaches with past and present governments of the TCI and feel compelled to point out that we are far ahead of Antigua in terms of how we deal with the Sandals Group.

    For starters, when the 2003 PNP Government came into Office, we heard the complaints of the employees at Beaches relating to not being able to accept tips from guests. To address this issue, we implemented the Gratuities and Service Charge Legislation specifically targeting the Beaches issue and forcing them and all other all-inclusive resort properties to assess a service charge on their room bookings and having the entire 100% of that charge paid to their employees. As a result of this, the salaries paid by Beaches in the TCI are perhaps the highest paid at any Sandals Resort in the region. If the worker is not getting his/her just due in this regard, it is simply a matter of policing the administrative process as the law is already on the books to facilitate this. Of course there is always room for improvements in salary at resorts and every avenue ought to be explored to achieve this.

    When the Development Agreement for Beaches was renegotiated during the 2003 to 2009 Administration, we insisted that Beaches pay full import duties on all items they imported as consumables (food and beverage, etc.). We then insisted that they pay a minimum of 5% import duties on all capital items for expansion and new development. It should also be noted that in many cases the import duty rate they have to pay is more than the 5%. On top of this, they, like other importers, have to pay the Government’s mandatory 7.5% Customs processing fee which is not negotiable.

    With respect to land that they purchase in TCI, we discounted the amount of stamp duty they had to pay in some cases to encourage the transaction to materialize, but at no time were they exempted from paying any stamp duty. As it relates to the Accommodation Tax, Beaches has to pay the full amount of 12% to the TCI Government, monthly, and would be assessed the usual penalty if they were delinquent in making this payment.

    I feel sorry in some respects for the Government and Prime Minister of Antigua and Barbuda because Sandals appears to have held them hostage. They get 100% exemption on all capital items imported into that country for 35 years; they are significantly discounted on the taxes due on their operational profits; and they are free to hire with impunity the full complement of their managerial staff from foreign countries in most cases. To top this off, they were only paying 35% of the requisite fee for Accommodation tax. This kind of egregious behavior is unheard of in the Turks & Caicos Islands for any developer, including Sandals. While I do acknowledge we have issues in this regard, they do not go to this extent.

    To Prime Minister Gaston’s credit, he went to great lengths to accommodate Mr. Stewart. Notwithstanding this, Sandals and the labour union in Antigua and Barbuda worked in concert and took advantage of the Prime Minister’s kindness and tried to undermine his best efforts to keep the resort open.

    The Prime Minister and his Cabinet granted Sandals extensive concessions and were prepared to grant even more to prevent Sandals from closing for the five months they were threatening. The Government even showed deference to the resorts when amending the Legislation which sought to make it mandatory for owners of properties that have over 3% of the bedroom capacity in Antigua and Barbuda to meet with the Government first before closing for a period exceeding two months in a calendar year. The amendment addressed the failure on the part of the resorts to give such advanced notice and states that tax concessions “MAY” be clawed back by the Minister of Finance in Cabinet if the owners did not comply. This is not to say that closures for extended periods would not be granted, but merely to provide the Government with the opportunity to mitigate through negotiations with the developer any attempt for properties to close at all.

    So while I do agree that this initiative is something that we in the TCI and the rest of the Caribbean should support in putting up a united front to Sandals, it is hardly a panacea for how we ought to deal with a bully. The only way to stop the “Bully” Sandals Group in its tracks is for when they make such threats to close down for long periods, we dare them to do so. God help us if they do, because I don’t know of any government in the Caribbean who would be prepared to go to its people and tell them that they can’t come to terms with the giant so you and your children would have to go to bed hungry for three months. It becomes even more mind boggling when a government is relying on flights to come to their country with passengers to collect departure and accommodation taxes to meet expenditures and pay their countries’ loan obligations.

    It is noteworthy too that with all the hoopla going on in Antigua and Barbuda, Sandals still will remain closed for the three months they indicated which will take them up to the end of December 2017. And in doing so, none of the very generous concessions from the Government are being withheld. From the looks of things, the Antiguan Government showered them with even more concessions because they were alerted to the dire consequences that closure would bring.

    As for the TCI, I do think that we need to give credit to our Government when that credit is due. In saying that, I do recognize that there is still vast room for improvement with Beaches and the rest of the hospitality sector as we are indeed being exploited in many respects. Nowhere is that exploitation greater than in the tour excursion business for our people. But in terms of us learning how to deal with a bully from this episode that is taking place in Antigua and Barbuda, I don’t agree. Our relationship with and the benefits that we get from our resort industry in the TCI is far better than what exists in most countries in the Caribbean. In fact, if the truth were to be told, I believe that they can learn a thing or two from us.

    Regards,

    Floyd Hall

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