TEAM fears resort workers’ income may be indirectly affected by T-GST rise

The Tourism Employees Association of Maldives (TEAM) has expressed concern that certain resorts are planning to reduce service charges in the wake of the proposed increase to the Tourism Goods and Service Tax (T-GST).

“While the decision to increase Tourism General Services Tax (T-GST) is going to increase the government’s income, some resorts are trying to reduce the percentage of service charge collected from tourist for the resort workers; this is very concerning and unacceptable for our association,” read a TEAM press release today.

Earlier this month the People’s Majlis agreed to revenue raising measures which involved increasing T-GST to 12 percent in order to help finance the government’s record MVR17.95 billion budget.

“Even now, in most resorts, the services charge collected from tourists are not distributed according to law, and they are sometimes spent by the companies; the Tourism Employees Association of Maldives is very concerned about this as well,” said TEAM.

An employee of one of the country’s top resorts explained that current legislation mandated that 10 percent of service charge must be taken for staff, and one percent used for additional staff costs.

“But the current legislation doesn’t specify that the service charge has to be distributed equally,” said the employee – who preferred to remain anonymous. “There are a lot of loopholes.”

The trade union today called for the government to establish a comprehensive legal framework that regulates the payment and disbursal of service charges.

“Service charges and monthly wages and other allowances are privileges that should be sustained through bargaining through an agreement between the employer and and the employed,” said the union.

Workers at the Sheraton Full Moon resort went on strike last month, citing low service charge as one of the reasons. Local reports suggested that Sheraton’s staff were being paid less than one third of the amount made by fellow-workers in similar resorts from service charge.

One general manager, however,  told Minivan News that he felt TEAM’s fears were unfounded, suggesting that comparison with other resorts was a major reason for keeping staff benefits competitive.

“We need to keep staff happy in order to have happy guests. It’s highly uncommon for a resort to do this – it’s just not worth it. We want to attract and keep the best staff.”

“TEAM’s logic doesn’t make sense,” said the GM, who wished to remain anonymous. “I don’t know of any resort that does anything wrong with the service charge.”

Asked about the potential impact of the scheduled changes to tourism charges – which include the reintroduction of that flat-rate bed tax until November, alongside the T-GST increase in the same month – the GM said that it was the top resorts that would be worst affected.

“Higher end resorts will be experience more of a problem after higher T-GST replaces the bed tax, and it’s these resorts which normally charge a higher service rate,” he said.

Earlier this week, IMF representatives told a Majlis committee that – even at twelve percent – the rates of taxation in the tourism sector were “quite low” compared to other tourist destinations.

Dr Koshy Mathai, resident representative to Sri Lanka and Maldives, said he had paid “north of 20 percent” in taxes at a hotel in Fiji and that, as 70 to 80 percent of the Maldivian economy was “driven by tourism”, Mathai said that it was “only natural that the [tourism industry is] contributing resources for the economy to operate.”

He added that “rates of return on Maldivian resorts are among the highest in the world”.

“The people who come here are people with more wherewithal, more financial resources, who are more likely to be price insensitive,” said Mathai.


6 thoughts on “TEAM fears resort workers’ income may be indirectly affected by T-GST rise”

  1. Well then - trust Dr Koshy Mathai and the 5***** resorts ...

    A "pricesensitive" ...

  2. Resort returns are so high, because they all park their money, including much needed foreign currency, abroad and not pay enough taxes in this country. Charging each resort with a US$ 5.000 tax for each room they hold would yield up to US$ 1 billion per annum. Will resort owners pay the tax, not really, they will pass it on to their customers. However, as long as resort owners meddle in politics and buy the votes they like, the fat cats will continue to line their own pockets and MIRA will only be allowed to tick over. Poor governments are weak governments. Get it?

  3. @guest. how the hell you calculate to earn a 1 billion dollar in tax by charging 5 dollar from each room. Explain us then we will impose this immediately.

    Bed tax 8 dollar per pax per night does even earn a billion in tax.

    Resort owners are are paying GST 8% , profit Tax 15% and then Island lease rent nearly a million dollar every year to the Government per Island, currently bed tax 8 dollar per pax, service charge between 6- 10% to the staffs, and Pension 7.5% to the Government.

    These resorts owners are also paying and contributing over 70% of the import duty to the Government.

    Please take a note of these payments that Resort owners are giving to the Government .

    Please also note that these resorts are also providing large numbers of job opportunities to the country.

    Its quite easy to say that Resort owners are ribbing the country and then you need to think twice now.

    I have been working in a resort for over 12 years and i am earning a decent money through my job and if these Resorts are not there, I will have no job or else I need to find a job from another country.

  4. Who the heck is Koshai Mathai - Dr of what, certainly not economics!
    The decision makers in the Maldives are going to destroy the economy with their narrow minded and ill thought policies. A great country is on the fast track to oblivion! I feel sorry for my ex work colleagues as jobs will disappear quicker than the experts predict!

  5. "Resort owners are are paying GST 8% , profit Tax 15% currently bed tax 8 dollar per pax, service charge between 6- 10% to the staffs," Said Hero,
    The truth is non of the resort owner pays a singal sent to the gove from their pockets, its all are taking from tourist, its not coming from their profit, can you tell us any possible way that a resort owner could run a resort with his family or with roberts only, without employees, its not a favor,employers hires the staff because there are no other way to operate the hotels. so without employees hard work resort owners cannot make that big money. only a fool would try to deprive working man and woman of their right to fight for betterment.


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