TAXES AND LEVIES THREATEN TOURISM REVIVAL
(Posted 17th September 2015)
The hard fought for revival of the Kenyan tourism sector is according to hospitality industry sources put under threat as a result of constantly new levies and taxes slapped on hotels, inns, resorts and safari lodges.
The CEO of the Kenya Association of Hotel Keepers and Caterers, Mr. Mike Macharia, went on record yesterday in Nairobi cautioning greedy county governments from their habit of overtaxing hotels citing a number of examples which make shocking reading.
Among them are a swimming pool levy created by Kisumu County, one of the 47 Kenyan counties created under the new constitution which have turned into a massive drain on resources, much of it spent on luxuries, travel and allowances instead of infrastructure development.
Another case cited was a bed levy created by some coast counties, which regardless of that bed being occupied or not are being charged.
‘I am not sure if Kenyans knew back then what they know now, the new constitution would be passed. It has created a new layer of bureaucracy, a new layer of corruption and a new layer of inefficiency. There are counties like Machakos which are doing very well but to be honest, most suffer of inflated egos by governors and councilors who saw their election as a ticket to eat taxpayers money. Most have no idea how tourism functions even though the like to be political tourists camping at posh hotels in Mombasa or taking irrelevant trips overseas. Now, elections coming nearer, they suddenly get frantic to think of their election promises they made. Now they need money but because so many of them are nearly broke they look for new taxes and levies. This threatens the hospitality businesses because right now, raising tariffs, is next to impossible’ ranted a regular Mombasa based contributor when passing the information last night.
The situation according to others is compounded by the lack of boards for the fragmented parastatals dealing with tourism, which the last government created to award their sycophants with jobs and board appointments. Grading and classification of hotels is stuttering along at best and financial support from the body which took over from the former Kenya Tourist Development Corporation is equally stuck as no board is in place to approve loan applications.
Said another regular critic of the present institutional set up in Kenya who for long has advocated for a single strong tourism authority: ‘Our marketing efforts might be in vain if we cannot remove over taxation from the industry. There is still the issue of VAT on tourism services which government has never reversed. They thought they were clever when they introduced that tax but in net terms, with falling arrivals over the past years, what has that yielded. The result was we outpriced ourselves from our closest competitors and that cost us tourists too. I also want to know what the Cabinet Secretary has done with the recommendations of the tourism recovery committee which were handed to her before ITB in March. There is total silence on that issue and we as an industry have spent valuable resources and time to contribute and make the report. All gone silent! We do not need activism and hype but deliberate hard work on both our markets and on our internal barriers to success, and taxes and levies are some of those issues. Why is KCAA still blocking airlines from flying to the coast? You keep writing about Qatar Airways, about Fastjet, why are those not allowed to fly to Mombasa or to Nairobi? You can see the level of challenges we have ahead of us’.
Another went on to cite the recent saga on Visa for visitors to Kenya, which – after having dozens of wannabe tourists denied boarding by airlines in the early days of September – ended up in a U-turn: ‘We told them to listen and they would not. What is the rationale behind demanding Visa in advance when our main competitors and even neighbours continue to offer Visa on arrival or like Seychelles not even bother to ask for Visa? It was plain stupid because tourists could for instance fly to Kigali or Entebbe, get their common East Africa Tourist Visa and then enter Kenya without that troublesome and bothersome e-application. And what happened in the end? I bet someone maybe in KQ figured that their numbers were threatened, shouted on top of their voices and hey, the President rescinds the order when he was in Italy. That is not how we should work, this is not how we should make ourselves appear as incompetent fools to the world. Please write just that but do not give my name I bet you’.
Time, as always will tell but the Kenyan government would be well advised to listen to their tourism industry captains and not ignore their advice and guidance like three years ago, when it is now patently obvious what happened to the sector as a result of ignoring them then.
