VAT on tourism services set to become test case on public private sector relations


(Posted 23rd June 2016)

It seems we got another incompetent fellow in the tourism ministry after all! I tell you where those tourists will go who are unwilling to pay 18 percent more for taxes on their safari packages: They will go to Kenya where they just removed VAT from tourism services, they will go to Rwanda or Uganda or Zambia or Zimbabwe, where they are also removing VAT, but we will take the hit. I recommend the good Professor reads up on the history of the impact of putting VAT on tourism services in Kenya over the past three years and studies the reasons the Kenyan government gave for lifting the tax again before he shoots off his mouth. Unless he wants to destroy our tourism sector single handedly that is in which case he better resign now or we shall fight him tooth and nail until he is sacked‘ ranted one regular Arusha based source with dozen of other comments reflecting a mirror image of this outspoken attack on Prof. Maghembe, Tanzania’s Minister for Natural Resources and Tourism.
Others openly accused the Minister of abandoning the private sector in the hour of need, after last year’s arrival figures showed a decline, likely to accelerate in view of a weaker world economy and the added cost burden inflicted on safari packages.
Regional stakeholders, on condition of anonymity, also confirmed their feats that VAT on tourism services will be counter productive for their Tanzanian colleagues who incidentally once again refused to join the common tourist Visa for East Africa and other initiatives presented at the East Africa Tourism Platform meeting in Arusha last weekend.
Professor Maghembe was also criticized for his reported comments that a loss of income from hunting was to blame for the government’s decision to heap VAT on the sector with some commentators claiming Tanzania should long ago have abandoned the blood sport which one Kenyan conservationist known for her candid opposition of hunting called ‘immoral, unethical and unsustainable in this day and age‘.
Private sector association leaders were understandably more guarded in their comments and wished not to be quoted nor their associations named as they feared that repercussions could be swift and harsh on them as individuals and collectively, going by past experience with whistleblowers in Tanzania.
Yet others challenged the Ministry to put on the table figures of arrivals of 2015 versus 2014 and the arrival data of the first four months of 2016 to allow an open comparison and be able to determine reasons for decline in arrivals.
In closing it was also mentioned that tourism stakeholders will lobby parliament to throw out the VAT on tourism services when taking votes on the budget, though given the majority of the ruling party CCM in parliament, this may be easier said than done.

2 Responses

  1. The Tanzanian Government should be reminded of current unrest around the world caused by youth unemployment. This tax will cause MASSIVE unemployment in the Arusha/Moshi area -Young men who live from tourism , porters, cooks, guides, hotel workers – Look at the social causes of the Arab Spring, look at the fate of tourism in Egypt, in Tunisia, in Morocco
    The tourism industry is already reeling from the effects of terrorism and the global economic crisis-now this!!