HOTELIERS yesterday expressed their anger at the reintroduction of the Cyprus Tourism Organisation (CTO) levy set to take effect tomorrow, saying it would add considerably to their expenses for the current summer season.
They say they will have to foot the bill for increases in certain services and alcoholic drinks, which, coupled with a VAT hike also taking effect tomorrow, will add an extra 13 per cent in cost.
VAT currently stands at eight per cent but will rise to 10 per cent tomorrow, ultimately reaching 15 per cent in line with EU averages.
The CTO levy was scrapped in 1991, to compensate for losses caused to the industry by the Gulf War.
But hotel owners say the re-introduction of the levy along with the VAT rise will have serious effects on their business.
According to the law, hotels and restaurants which now charge eight per cent VAT will from tomorrow charge five per cent VAT plus three per cent CTO tax.
But the cut in VAT for hotels does not cover alcoholic drinks, or services like television rental, gym use, and the like.
Thus with the new hikes, alcoholic drinks will carry a 13 per cent surcharge on top of their actual cost.
The Chairman of the Hotel Association, Zacharias Ioannides told the Cyprus Mail this was a serious cost, for which the hotels had not planned.
He said prices for this and next season had already been set and tour operators were already selling packages according to existing prices.
"We cannot change the prices now," he said.
"Contracts have been signed and brochures for next summer are already in circulation," Ioannides said.
He added that hotels were not given enough time to prepare before the introduction of the tax.
"Software needs to be updated and menus and price lists reprinted," said Ioannides.
The association has already issued a written statement complaining about the decision to hike taxes and urging the government to reconsider.
"We will examine the issue next week," Ioannides said, "and depending on the reply we will decide our next move.
"With such tight time limits there should be some flexibility until certain aspects are reconsidered," he added.
The CTO tax also affects restaurants.
One Nicosia restaurateur told the Cyprus Mail the tax would cost her business a lot of money because they had already booked parties at specific prices, which included drinks.
"This way, it’s as if like we are working for free," she said.
