Uganda’s Parliament asked for tax breaks for tourism industry

(Posted 14th January 2022)

After losing over Shs22 billion on account of budget cuts on consumptive items over the past two pandemic years have members of parliament in Uganda been asked for tax breaks for the sector.

While presenting the tourism sector’s Budget Framework Paper for financial year 2022/23 before the Parliamentary Committee on Tourism, Trade and Industry on Thursday, 13 January, 2022, Hon. Bahinduka Martin Mugarra, the State Minister for Tourism, Wildlife and Antiquities was dismayed by the persistent underfunding and budget cuts on consumptive items on tourism.

The appropriation to the tourism sector has historically been below the threshold required for the industry to perform its role meaningfully. A sector that generates about 10 per cent of the GDP cannot be continually allocated less than 0.4 per cent of the national budget,” Mugarra said.

The tourism sector has over the last two financial years lost over UShs 22 billion on account of budget cuts on consumptive items.

In the coming FY 2022/23, the Tourism Development Programme has a Medium Term Expenditure Framework provision of UShs 176.9 billion which is a reduction of UShs 20.5 billion that the sector has as approved budget in the current financial year 2020/21.

According to the Minister, their efforts to achieve faster recovery of the tourism sector are being derailed by inadequate budgets and subsequently requested the Committee to exempt the sector from budget cuts and also fund the sector’s key unfunded priorities amounting to UShs 87.2 billion.

The Tourism sector demanded that their budget ceiling for 2022/23 be increased to UShs 259.1 billion from the current UShs 176.9 billion if they are to revamp the sector that was seriously hit by COVID-19. The ministry revealed that foreign tourist arrivals dropped by 69.3 per cent to 473,085 from 1,542,620 visitors in 2019 causing a drop in foreign exchange earnings from US$ 1.6 billion in 2019 to US$ 0.5 billion in 2020.

Tourism has high transformative power to Uganda’s economy if fully harnessed. If we can attract 100,000 additional tourists in the country then our tourism exports would increase by US$ 98 million and add one per cent to the GDP,” Mugarra said.

The Committee pledged total support to enhance budget allocations for the tourism sector on condition that they come up with creative and strategic interventions to attract both domestic and foreign tourists.

It is a big concern that the tourism sector has budget shortfalls everywhere yet the sector has potential to thrive. We are going to support you. We can cut money elsewhere, and ensure that tourism is fully funded,” Hon. David Mugole Mauku (NRM, Kabweri County) said.

Underfunding has been the perennial foe of Uganda’s tourism industry private sector and government marketing arm for decades now, and apart from periodic lipservice funding upswings has the Ugandan government done little to make the sector more productive – leave alone delivered on promises made at the onset of the pandemic for sectoral subsidy support, after closing airport and land borders for several months and mandating a hard lockdown, effectively shutting down the hotel, restaurant and tourism businesses.

A key tourism stakeholder told ATCNews on condition of anonymity that little is expected of the initiative, as government’s coffers are empty and the state clearly had different priorities in spending.

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