Tourism stakeholders in Uganda ‘hugely disappointed’ over VAT decision


(Posted 21st September 2013)

So it was all in vain’ commented a leading Uganda tourism stakeholder in an email yesterday evening when news emerged that parliament had voted to maintain 18 percent VAT on tourism services and in particular on previously exempted hotel, lodge and camp accommodation upcountry and in the national parks.

We lobbied these guys but it seems their mind was made up. Government and parliament did our sector a great disservice and there will be a price to pay for such flawed decision making. We are facing a lot of problems with overseas tour companies over the increase in prices because we had quoted firm rates and who now will absorb this added 18 percent tax on accommodation upcountry. Our officials have no understanding of the consequences of such short term decisions. If at all they could have given a long enough advance warning like making it effective in January next year or for next financial year. It seems governments, not just ours but those across our borders too in Kenya and Tanzania, behave like bulls in a china shop. They fail the minimum standards we in the private sector uphold to give advance notice of price rises like UWA for instance does or KWS. They revise tariffs with enough lead time to permit for adjusting quotations. For me I mince no words that we elected fools who do not understand the inner workings of business. At the same time they kill our tourism marketing by giving us a laughable amount of money to run UTB. What on earth can 200.000 dollars do to market a whole country. What issues do they have with tourism that they only give us words but no money? asked a regular source on – understandably – condition of strict anonymity.

Leading tourism stakeholders, as was reported here at the time, had attempted to engage the respective parliamentary committees on tourism and budget but it is now clear that inspite of assurances by members of these committees to make appropriate recommendations to the plenary the tax burden was ultimately retained.

Faced with the wrath of voters though parliament yesterday removed the 200 Uganda Shillings added excise duty on kerosin, which the moment it was brought to the public’s attention during the finance minister’s budget speech brought wide spread condemnation of government hitting the poorest the hardest, while wastage of massive proportions in government expenditure and rampant corruption were left unchecked.

Other stakeholders were loath to go on record but maintained that the tax measures left them fighting for financial survival as many had to ‘cough up’ the tax burden, as one put it, from their own resources after overseas clients refused to accept the added charges, referring to firm quotations, or else they would cancel their trips. Quo vadis Uganda Tourism – time will tell no doubt so keep watching this space.