Summary
· "Hotels are already charging 15 percent as VAT now plus $5 dollars; this is definitely felt by consumers who might be forced to look elsewhere,"
Unguja. Hoteliers and tourism stakeholders in Zanzibar have said
the introduction of the $5 levy for every hotel room occupied per night in the
budget that was read on Thursday, June 15, is likely to affect the sector
massively.
But the government has maintained
that the levy will have no meaningful impact on the private sector.
In an interview with The Citizen,
Zanzibar’s finance minister, Saada Mkuya Salum, said the new levies would be
implemented immediately with effect from July 1.
"Hoteliers will have to see how
to implement this, and I don’t think it is going to affect their businesses to
that extent. What we are doing is creating a conducive business atmosphere; for
example, regarding the issue of electricity, we have removed VAT on solar
panels," Ms Mkuya said.
She added: “The $1 levy was in
operation for eight years, and it was a blanket fee for everyone, but now we
have categorized according to the stars”.
The planned implementation now
leaves hotel stakeholder groups at the mercy of legislators in the House of
Representatives, who start debating the budget today, Monday, June 19.
Speaking to The Citizen at different
intervals, they said such measures only make Zanzibar an expensive and
unpredictable place to do business.
They said having so many levies
takes away the competitive edge that Zanzibar has against other island nations
in the Indian Ocean.
"Hotels are already charging 15
percent as VAT now plus $5 dollars; this is definitely felt by consumers who
might be forced to look elsewhere," said one hotelier in Stone Town who
preferred anonymity.
She added: Though we are seeing a
rebound in the sector with some handsome numbers of arrivals, we have to
remember that this is an industry that was ravaged by the pandemic and some of
the businesses are still in the recovery period.
The chairman of the Zanzibar
Association for Tourism Investors (Zati), Rahim Bhaloo, said the new
development has taken the industry stakeholders by surprise, adding that there
was a need for prior engagement given the dynamics and nature of business.
"This is surely going to create
concerns and challenges for service providers, knowing that the tourism season
is about to start or, for some, has already started. We sincerely request the
government to reconsider this, delay its implementation for now, and give
stakeholders some time to be able to inform their agents about this raise,
knowing that the rates for this season have already been negotiated and signed
between agents and service providers," said Mr Bhaloo.
He added: Some holidaymakers have
booked their hotels a year in advance; therefore, surprising them with
additional costs overnight might either make them choose alternative
destinations or the service provider will have to incur extra costs to maintain
his reputation.
He further said the new measures
require gradual integration and transition as hoteliers prepare their clients
for the changes.
According to him, the government
should enhance further tax collection from the value chain that the tourism
sector creates instead of putting all pressure on a single source.
Spillover effect?
The Tanzania Association of Tour
Operators' William Chambulo said that although the new changes that take effect
on July 1 are in Zanzibar, they are likely to affect Tanzania Mainland because
40 percent of the visitors who come to Zanzibar also visit Mainland.
"This is the shoulder season,
and the holiday packages are usually sold a year in advance, and the sale is
closed, so there is just no way you can go back to the clients with new rates
that require them to dig deep into their pockets," said Mr Chambulo.
He joins other commentators who have
cautioned that the move makes Zanzibar and Tanzania, in general, unpredictable
and unprofessional in the tourism industry around the world.
"Much as the introduction is
necessary for revenue purposes, they should grant hoteliers a grace period
before it becomes operational because at the end of the day we will have to
pass it on to the visitors," he says.
In her budget speech on Thursday,
June 15 in the House of Representatives, Ms Salum said the changes were
inevitable because the existing $1 was not realistic in today’s atmosphere.
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