Tourism operators rebuke new tax law

Published: 17 February 2014

Stakeholders in tourism industry last week called on the ministry of Finance to stop the implementation of the 15% value added tax (VAT) on international arrivals, saying the new measure was counter-productive and would stunt growth of the sector.

In an interview on the sidelines of the stakeholders meeting that was intended to present a position paper on the new tax to Patrick Chinamasa, the Finance minister, Tourism and Hospitality minister, Walter Mzembi said tourism was the country's pride which could generate more income even with no funding.

"We call on the government to reverse or delay the implementation of the 15% tax on international arrivals so that operators stay in business. As the ministry, we see no reason why that was stipulated when we already have so many areas which need attention," said Mzembi.

Chinamasa however did not show up to respond to the call of operators.

Mzembi said tourism would excel with government support and if unnecessary taxes were done away with.

"The biggest mischief that is hampering the tourism sector is inadequate harmonization of laws that promote the industry. If properly invested in, tourism would certainly generate more than the government's 2013-2014 budget of $4 billion. In fact, it is very possible that Victoria Falls alone would generate that amount," said Mzembi.

Zimbabwe Tourism Authority (ZTA) chief executive Karikoga Kaseke said the tax system was putting an embargo on local tour operators and causing a decline in tourist arrivals. He stated that there were other innovative ways of raising revenue that government could explore.

"The period 1980-1999 arrivals' average growth rate was 14% per annum. Had this growth been sustained, over 14 million arrivals would have been realised in year 2013 but we have created an embargo for our clients as the negative destination brand has continued haunting the nation.

"To attain the targeted revenue there is need to improve the destination image, target high value markets and develop Zimbabwe as an international hub for shopping and other leisure activities," he said.

Mzembi revealed that his ministry had received $2 million funding that will go towards development and setup of a Tourism Satellite Account module – a statistical package designed to accurately measure the sector's contribution to the country's gross domestic product (GDP) and also for the implementation of the National Tourism Policy.

In a major policy climb-down, Chinamasa proposed in the 2014 national budget, that VAT be imposed on payments for accommodation and services by foreign tourists.
- zimmail