Summary
· With Parliament expected to start debating the government’s Sh44.4 trillion Budget for 2023/24 today, players in tourism and aviation have opened up on its likely impact on the two areas, which are recovering from the effects of the global Covid-19 pandemic
Dar/Arusha. As the Parliament starts to start the Sh44.4 trillion
budget for the financial year 2023/24 today, players in the tourism industry
say the plan contains several issues that will boost the sector and tweak the
rate of its recovery of adverse effects of the global Covid-19 pandemic.
Tanzania earned $2.827 billion worth
of foreign exchange earnings during the year ending April, 2023, a massive jump
from $1.56 billion during the year ending April, 2022.
In a clear indication that tourism
was on a clear path to recovery from the global Covid-19 pandemic, the foreign
exchange earned during the year ending April, 2023 put the sector almost at par
with gold which brought into the country $2.847 billion during the period.
Some of the measures which tourism
players commend include the reduction of tourism business license fees for
accommodation establishments owned by Tanzanians from $2,500 to $1,500 for
five-star hotels; reduction of the tourism business license fee for ungraded
accommodations establishment, in protected area from $1000 to $300 and VAT
exemption on sale and lease of air charters.
Presenting the budget in Parliament
on Thursday last week, the Finance and Planning minister, Dr Mwigulu Nchemba,
proposed a reduction license fees for one star hotel from $1,000 to $200.
For homestay, he proposed a
reduction from $400 to $100 and hostels from $400 to $200.
Dr Nchemba also proposed the
abolishment of fees on grading and regrading to all accommodation facilities
established inside and outside protected areas.
All this is part of the government’s
wider efforts to realize its goal of attaining the number of tourists visiting
the country from last year’s 1.5 million to five million come 2025 and revenue
earnings amounting to $6 billion.
As such, Jackpot Safaris Ltd
managing director Andrew Malalika described the budget as being the best ever
before and that it will take the industry to new heights.
He however said that for the dream
to come true or pretty close to a reality, the government should work closely
with the private sector on the marketing of the country’s attractions and
strategic plan.
Noting that some officials were not
giving the much-needed support to the industry players, he said the government
for their part should work on some policies impending the growth of the sector.
“It is high time we joined our
hands. When investors come here do not differentiate between the government and
other stakeholders. They view Tanzania as one,” asserted Mr Malalika.
And, according to the Tanzania
Association of Tour Operators (Tato) Chief Executive Officer, Mr Sirili Akko,
the government has done a commendable work for amending various laws to create
enabling environment for investors.
“We are delighted that the
government is proposing for all regulatory institutions to start using a Single
Window Payment System for collection of fees, levies and penalties and
establish inspection procedures to facilitate business without affecting their
core functions” he said, adding that this will save time and cost for tourism
investors.
It is understood, the
Government is finalizing the development of Tanzania Electronic Investment
Single Window (TeIW) system.
He was however of the view that the
government should not introduce a new tax on tourist vehicles as it would
discourage investors to invest heavily in expanding their companies over the
new tax, particularly this time when they’re struggling to pay debt animated
from the effect of Covid-19 pandemic.
Meanwhile, Tanzania aviation has breathed
a sigh of relief, thanks to the government law reform to offer a tax break in a
bid to spur growth of the intertwined multi-billion-dollar industries of
aviation and tourism.
This implies that the government
wants to undo the measure taken in the Financial Year 2022/23 on supply of air
charter services, as it seeks to align with the efforts of reviving tourism
industry along with the invaluable move of President Samia Suluhu Hassan of
promoting Tanzania as a tourism and investment destination, through the Royal
Tour film.
The Tanzania Air Operators
Association (TAOA) board Chairman, Captain Maynard Mkumbwa, welcomed the
government move, saying it offers enormous opportunities for the key economic
industry to grow by leaps and bounds.
“This has been our grave
concern all along. However, TAOA appreciates the government for being
considerate. Our earnest gratitude goes to the President, Dr Samia Suluhu
Hassan, for her painstaking efforts to create conducive business environment”
Captain Mkumbwa noted.
TAOA Chief Executive Officer,
Lathifa Sykes said that the VAT on air charter services contained a seed of
destruction as it had created turbulence and slowed down investments in the
aviation industry.
The aviation sub-sector is a key
pillar of tourism in Tanzania as it contributes a fair share of foreign
currency to the country.
“I’m short of words for the
government and parliament to have heeded our scream to buy our argument. As we
seek to unlock the full potential of tourism to bring more foreign exchange, we
cannot afford to ignore the aviation as it plays a critical role of travel for
many tourists” Ms. Sykes said.
TAOA CEO expressed that when
aircraft are affordable, for example through VAT, exemption, investing in the
aviation sub-sector becomes lucrative.
Through increased investment in the
aviation industry, she explained as the basic law of supply and demand suggests
airfare becomes affordable.
“This will result in an increase in
local and international air travel. The investors will be happy with the
profits and so will the government will generate more income from tax” Ms.
Sykes stressed.
TAOA is the member-base association
that aims at fostering legal and responsible development of the aviation
industry by ensuring safety, efficiency, regularity and economic operations.
It provides a common platform for
the promotion of best practices and engages in effective advocacy with the
government through responsible authorities.
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