Workers shun Uhuru's tax holiday offer

Politics and policy

Local tourists at a deserted public beach in Mombasa. PHOTO | KEVIN ODIT 

By Lynet Igadwah, ligadwah@ke.nationmedia.com

In Summary

• The Kenya Association of Hotel Keepers (KAHC) Tuesday said the tax incentive has had no impact on the industry as workers appear to have ignored it.
• The incentive was part of measures that President Uhuru Kenyatta announced in May, and which Treasury secretary Henry Rotich included in his Budget to boost domestic tourism.
• The directive was expected to see at least 25,000 Kenyans go on a week’s holiday every month at the expense of their employers.

Kenyan workers are not making use of the tax incentive they were offered in June as authorities moved to shore up the tourism industry in the wake of a sudden dip in the number of foreign visitors caused by security concerns.

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The Kenya Association of Hotel Keepers (KAHC) Tuesday said the tax incentive has had no impact on the industry as workers appear to have ignored it.

“There has been zero uptake of the tax incentive,” said Mike Macharia, the KAHC’s chief executive, adding that the lack of a culture whereby companies pay for their employees’ vacation was to blame.

Mr Macharia also faulted the structure of the incentive, saying it only addresses an employee’s holiday costs, excluding that of their spouses and children who would have to pay their own way if they were to go on vacation together.

The incentive was part of measures that President Uhuru Kenyatta announced in May, and which Treasury secretary Henry Rotich included in his Budget to boost domestic tourism.

The directive, which came into effect on June 12, was expected to see at least 25,000 Kenyans go on a week’s holiday every month at the expense of their employers.

READ: Tax incentives planned to boost tourism

Mr Rotich in his Budget speech suggested amendments to the Income Tax Act to allow deduction of holiday expenditure incurred locally for a period of 12 months.

KAHC’s assessment of the policy’s efficacy is, however, in sharp contrast to recent comments by Tourism secretary Phyllis Kandie suggesting there was positive uptake of the tax rebate.

Mr Macharia said other measures aimed at boosting domestic tourism have been more fruitful, including the reversal of an earlier directive barring government agencies from holding meetings in hotels.

The reduction of landing charges at Mombasa International Airport is also expected to encourage more domestic and international arrivals at the Coast, which is famous for its beach holidays.

While acknowledging measures taken by government to shield tourism from further decline, Mr Macharia said negative travel advisories continue to plague the industry.

The US, the UK, France and Australian governments in May issued travel advisories warning their citizens against travelling to Kenya, a move that gravely impacted on tourist arrivals at the coast.

Dutch Airline KLM and the Korea Airlines last week discontinued operating charter planes to Mombasa, in addition to Thompson’s Charter that pulled out immediately the advisories were issued.