PREAMBLE
The global economy is experiencing a level of turbulence not seen since
the 1930s. Its effects are global and far-reaching. All of the major
economies are in recession. According to the International Monetary
Fund, the global economy is projected to contract by 1.3% in 2009.
The UN Secretary General has referred to the global crisis as a “jobs
crisis.” Indeed, the International Labour Organisation estimates on
account of this crisis, 30 million jobs may be lost by the end of 2009
pushing many retrenched workers into poverty.
In Grenada, the crisis is already manifesting itself in the following ways:
• Grenada’s economy is projected to contract by 0.5% in 2009 following estimated growth of 0.3% in 2008 and 4.5% in 2007.
• A 25% reduction in government revenue from Customs & Excise in
the first four months of 2009 (this Department collects more than 50%
of all government revenue)
• A slow down or halt of major tourism developments (approximate value of US$700 million)
• Decline in Tourist Arrivals (possibly by 15 - 20% in 2009)
• Rising Unemployment (could reach 30% by the end of 2009)
• Job losses/Job Rotation/ Reduction in Pay/Service charge in tourism sector
• Decline in Remittances (possibly by 20%)
• Tightening of bank liquidity (as deposit growth slows and non performing loans rise)
• High cost of living (especially food and transportation)
• Increasing difficulty by all Social Partners to meet their financial obligations.
The current downturn has the put at risk the viability of the industry
and the jobs created by the industry especially in the offseason (May
to November).
WHEREAS Government and the Grenada Hotel and Tourism Association
recognize the importance of the tourism industry to Grenada’s economy
and development. It is estimated that the tourism sector accounts for
a significant proportion of the Grenadian economy, provides many jobs
and is one of the largest generators of foreign exchange.
WHEREAS Government and GHTA recognize the difficulties currently being
experienced by the tourism industry due to decline in stayover arrivals.
WHEREAS, all Social Partners recognise the crucial role of the tourism
sector in respect of employment, foreign exchange, airlift negotiations
and continuation of direct transatlantic services and social cohesion.
AND FURTHER all Social Partners are currently in dialogue to develop a
Social Partnership expressed in a Social Protocol that would guide the
governance of Grenada during this economic and financial crisis.
THE GOVERNMENT OF GRENADA AND GRENADA HOTEL AND TOURISM ASSOCIATION NOW
AGREE to the following emergency support measures in exchange for an
expressed undertaking by the Grenada Hotel and Tourism Association and
all participating hotels and guest houses that there will be no hotel
and guest house closures and that they will guarantee at least three
days work per week for all permanent staff and use the services of
temporary staff as often as practicable:
The Objectives
1. To preserve existing jobs in the tourism industry especially in the hotels and guest houses;
2. To keep the hotels and guest houses as going concerns during this economic crisis; and
3. To preserve the direct airline services negotiated by the Airlift Committee.
1. The Measures
50% waiver of General Consumption Tax to allow hoteliers to remit 50% to Government and retain 50%.
This relief is for the months of May and June 2009, in the first instance, and is subject to the following conditions:
- The filing of outstanding financial statements and corporation tax
returns by hotels and guest houses. Everyone is required to file
whether a tax holiday exist or not. Moreover, in some instances, tax
holidays have expired but companies have not filed and paid corporate
income tax.
- The payment of outstanding GCT up to April 30, 2009 by June 30,
2009. Some companies are delinquent notwithstanding the current
provision to pay up to 60 days after the tax is collected.
- The disclosure of salaries of shareholders and directors
- A statement on the number of jobs provided by the industry broken down by hotel, names of employees and job categories
- Disclosure on plans to attract visitors to Grenada during the offseason
- Prompt provision of monthly statistics to the Grenada Board of
Tourism (GBT) copied to the Ministry of Finance (MOF) on occupancy
levels.
Further relief for the period July to September 2009 and possibly
October to December 15, 2009 will be considered in the context of the
Social Protocol and will be subject to periodic review (end of June and
September 2009).
2. Concessions on Consumables
Government will provide tax relief on selected consumables save and
except on food which can be purchased locally. The details will be
finalized in the context of the Social Protocol.
3. Concessions on Fuel for Dive and Water Sport Operators
Government will consider in the context of the Social Protocol. Likely
conditions will include registration of companies with the Inland
Revenue Department, filing of returns and being current with payments
for General Consumption Tax (GCT).
4. Additional Funds for Airlift and Marketing
Given the decline in Government revenue (at least 25% in Customs
collections for the first 4 months) and the proposed partial waiver on
hotel occupancy tax (an estimated loss of an additional $3.5 million),
Government is not in a position to provide an additional $10 million
for airlift and marketing.
Consequently, the Airlift Committee and GHTA agree to aggressively
encourage corporate Grenada and private citizens to take advantage of
Government’s special incentive of a 125% tax incentive for corporate
and private citizens who make financial contributions to the Airlift
Committee. Government commits to match these contributions.
Government, including the Ministry of Finance, the Ministry of Tourism
and the Grenada Board of Tourism will meet with the Airlift Committee
and the GHTA to review this request and consider creative ways to
maintain and increase airlift with the requisite destination marketing.
Further, consideration will be given to broadening of the Airlift
Committee to include representation of Ministry of Finance in the
negotiations of further airline services.
5. Support for Training
Government will provide training opportunities under the Skills for
Inclusive Growth Project financed by the World Bank. The GHTA and
Government, including the Grenada Board of Tourism, will further
discuss areas for collaboration in the upcoming months.
Eligibility
The provisions of this MOU are open and available to all hotels and
guest houses whether they are members of GHTA or not. However, all
conditions of participation apply and each participating property must
sign an individual agreement with Government committing to these
commitments and undertakings in exchange of these emergency relief
measures.
SIGNATURE PAGE
Signed By:
For Government:
……………………….…..
Hon. Peter G. David
Minister for Tourism
………………………………..
Hon. V. Nazim Burke
Minister for Finance
For Grenada Hotel and Tourism Association:
……………………….
Mr. Russ Fieldin
President
Grenada Tourism and Hotel Association
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