UGANDA’S HOTEL FORCED TO RAISE TARIFFS BY 18 PERCENT
(Posted 27th June 2013)
Notices are now being sent out by hotels, lodges and resorts from across Uganda to their clientele, warning them of an imminent rise in tariffs. The Ugandan Minister for Finance Maria Kiwanuka, during her budget speech two weeks ago, announced that the exemption granted for hotels of VAT would be lifted and full rates of 18 percent value added tax be imposed, come July 01st.
While tourism stakeholders immediately objected to the measure, some pointing to the clear discrepancy of government terming tourism and export industry and yet now slapping a key ingredient, accommodation and meals, with 18 percent VAT while other exports do not have to bear such added cost, like in all cases past when it comes to tourism, at least in most cases, these observations where brushed aside and ignored.
‘Uganda is already perceived as a bit expensive compared to Kenya for instance, but the last budget dealt us a big blow. Fuel is increasing because of a tax rise for petrol and diesel and accommodation is now also going up by 18 percent. This is not something we can absorb. We already are stuck because we have quoted firm rates for our tours and when the tax takes effect, how will we be able to explain to clients that this has to be paid extra’ lamented a frequent commentor on articles, expressing the sentiments heard from across the entire tourism sector before adding: ‘We are now made to pay for financial indiscipline. Just look at all those huge supplementary budgets which were passed since the last budget was presented. Last year we were told of spending cuts and how government must save money. Where did all that go? Instead they spent more than they had. The financial scandals also robbed us of a lot of donor funding and now we are all punished by higher taxation. The poorest of the poor will fork out 200 shillings more per litre of kerosene, pay VAT on flour and water. Those extra taxes on our tours will make us less competitive really and the UTB promotion budget is also peanuts. They are not serious’.
One of the hotel notices received in copy reads:
Dear Esteemed Guests,
Please be advised as of July 1stthe hotel & tourism industry has been imposed a mandatory 18% Valued Added Tax on all accommodation, food and beverage sales.
We have no alternative than to be adding this to our standard rack rates.
Apologies for any inconvenience and thanking you for your understanding in advance.
Quo vadis Uganda Tourism, once again a pertinent question asked which however seems to be falling on deaf ears once again, as the lip service to the sector, a key cornerstone of Uganda’s economy, continues without any concrete measures to boost the sector and help it live up to its true potential. Watch this space.