Govt can still save tourism this season from VAT noose

Now the formal notice is out, that unless something is done about the imposed VAT, operators in the European Union will have no choice but to advise their clients to opt for alternative places for their holidays, for the reason that they can’t pick up the new VAT bill without passing it on to their clients – which is a bit too late.
That is why the travel agents’ organization is asking the government to defer implementation of the VAT until October, at least, since travel arrangements based on existing rates prior to the new VAT would have been made, and any new charges would be for the next season, or say high peak in mid-2017.

So far the losses which have been registered look substantial and perhaps the outlook for losses is staggering, but nothing has been heard from government authorities so far. It is not clear why there is stolid silence in that regard despite the gravity of the situation on the ground.

There is an oft-used expression about killing the goose that lays the golden egg, and that is precisely what is happening at this time – that the government is stifling tourism operations in that it wants too high a portion of travel expenses for its coffers.

It is like asking European holiday makers to develop Tanzania by force, pay for its infrastructure as it can’t conceive letting go of state ownership of its loss-making edifices in whatever sector.

It is demanding that everyone who makes an earning or uses any services in the country pays substantially, with the government having the last say about the amount to be coughed up in each case.

It isn’t clear so far if this VAT increase on tourism services is a totally new tax or it is directed at companies’ earnings, in which case they are going to download them on the customers using the services. What is apparent is that this matter has been smouldering in government thinking for years.

For instance, ex-Natural Resources and Tourism minister Lazaro Nyalandu was put on spot by Parliament for not gazetting levies hotels were supposed to pay on the basis of room occupancy or capacity for each of them.

The reason the minister was reluctant to gazette the charges were the same - that a backlash from stakeholders would ensue, resulting in paucity in room occupancy in hotels and lodges.

It is evident that those who are now making policy are less sensitive to such precautions as they apparently doubt the very integrity of those who negotiate with big companies and listen to their points of view, an attitude which is unfortunately one of the hallmarks of our political culture.

At times this is beefed up by criticisms from outside that we let our country’s natural resources be used by people from outside who pay peanuts for it, and we find an answer in introducing new taxes.

Minister Maghembe should recall his 500 per cent tax slap in 2007 when he was at the helm of same ministry. He had to be deployed to another ministry while the new taxes were promptly cancelled.