TANZANIA: Value Added Tax On Tourism Services To Stay

The government will not change the decision to introduce an 18 per cent Value Added Tax (VAT) on tourism services, the Minister for Natural Resources and Tourism, Professor Jumanne Maghembe has hinted.

He said here that the decision was arrived at after a careful planning and there are strong reasons for it than against. Professor Maghembe noted that hunting tourism is on the decline so there had to be found something to fill the gap of funds that will not be available. He said buyers and user of goods and services are charged VAT, and wondered why alarm is raised on tourism services.

Also he noted that the government has vowed to invest more on development expenditure rather than recurrent expenditure, hence there is a need of money to fund free education, build infrastructure and offer health services. He said tourism being the sector that earns the country highest percentage of foreign currency, the decision had to be taken.

He allayed fears expressed by sections of tourism stakeholders that the VAT imposed on tourism services would lower the number of tourists and subsequently the funds emanating from them. "Some people are against that, but it is only 18 percent.

Out of 100 dollars they pay us 18 dollars extra. They claim tourists will not come to Tanzania, I assure you they will come; where will they go?" he questioned.

Expounding on that, Professor Maghembe said Tanzania national parks are highly rated, out of 50 best parks in Africa, 10 are from Tanzania due to natural beauty and efforts put in to conserve the same, hence many people would like to come and enjoy the attractions.

He promised that part of the funds generated from tourism activities from now would be invested in promoting Tanzania tourist attractions worldwide, through international television channels.

He said that will bring in more tourists and country earn substantial earnings so that tourism sector contributes bigger percentage to the country's coffers. He brushed aside claims that Kenya and Uganda were earning more from tourism, clarifying that it is Tanzania at the top.

He said Kenya has two million tourists per year, Uganda 1.5 and Tanzania about one million, but the latter earns more foreign exchange since tourists spend more days in Tanzania than in the two states.

Professor Maghembe said parks are going to be improved by getting rid of poachers, stopping cattle and people from intruding. Tanzania Tour Operators (TATO), Kilimanjaro Association of Tour Operators (KIATO) had requested the government to reverse its decision on VAT charge, claiming a crisis was looming and that tour companies would die gradually as they would fail to shoulder costs.

Presenting 2016/17 budget proposals last Thursday to Parliament, the Minister for Finance and Planning, Dr Philip Mpango said the government would impose VAT on tourism services, such as park fees, ground transport services, tourist guiding, game driving, water safaris, animal or birds watching.