Tanzania’s Tourism industry now hopes for presidential intervention over VAT


(Posted 04th July 2016)

Relations between the Tanzanian tourism fraternity and their tourism minister Prof. Maghembe have reached a new low, posing a challenge to the politician as alienating his sector may make it difficult if not impossible to effectively manage the industry.
He got into the bad books over his insistence that heaping an 18 percent value added tax on tourism services will be ok as, in his own words ‘where will they go‘ referring to tourists as if they have no choice.

While in Kenya the VAT on tourism services was lifted, following the devastating impact the measure had on the tourism industry over the past two years, did Tanzania’s Finance Minister Dr. Mpango the opposite, clearing ignoring expert advice and the negative example of how this worked out in Kenya.
The tourism sector in Tanzania, following a meeting of over 500 stakeholders over the weekend, has now resolved to appeal directly to President John Magufuli to remove the contentious clause from the Finance Bill 2016, a move which is a resounding vote of no confidence in their tourism minister.
Kenyan tourism stakeholders were swift in supporting their Tanzanian counterparts, recalling the problems their 16 percent VAT created through higher prices for safari and holiday packages and sympathized with their colleagues who are now faced with the prospect of learning the hard way what misguided political action can mean for an already struggling tourism industry.
Reportedly have sections of the tourism fraternity in Tanzania also lobbied to take the matter to court and get an injunction, but first indications are that the cost for safaris, including park entrance fees, has risen since the 01st of July by a staggering 18 plus percent, as commissions need to be built into safari prices and the new VAT factored in.
Count on safari packages going up by about 20 percent‘ said a regular source from Arusha before adding ‘This will outprice us in comparison with for instance Kenya but also with other safari countries like Zimbabwe, where they are just lifting the 15 percent VAT on accommodation. When we lose business and the statistics back us up, who is to blame? Of course government and these ignorant and arrogant ministers who cannot see what damage VAT on tourism services has done elsewhere‘.
Harsh but well deserved words in particular against their own tourism minister who has clearly chosen confrontation and upheavals over consensus, support for the industry and smooth sailing.

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