Tanzania Tourism Ministry Say Sector Has Grown Unexpectedly Despite Heavy Tax

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A new report released by Tanzania’s Ministry Natural Resources and Tourism says the sector has registered remarkable growth between June and August 2016 despite the introduction of stringent Value Added Tax (VAT) on tourism services.

Titled Safaris in Tanzania, the report shows that revenue from the sector increased by 17 per cent between in the period under review.

The Ministry also said the earnings from the sector rose to 67.87bn/- between June and August, this year, up from 57.96bn/- collected during the same period last year.

The number of tourists who visited several national parks during the period also climbed up to 348,547 against 340,308 recorded the previous year.

President John Magufuli publicly backed a proposal by his finance ministry to introduce 18 per cent Value Added Tax (VAT) on tourism services and transit cargo, a thing which upset industrial players.

During a budget presentation in June 2016, Tanzania Finance and Planning Minister Philip Mpango introduced the VAT on tourism services, structured to commence in financial year 2016/2017.

Tanzania Members of Parliament (MPs) argued that the new tax measure in tourism services would impact the sector negatively, citing Kenya’s experience whose sector was hit hard after the government introduced a similar tax measure.

The legislators said Kenya had to drop the tax after realising it had affected their tourism sector negatively last year.

Speaking during a public function in State House Dar es Salaam, president Magufuli wondered what it would benefit the country to host mammoths of tourist who don’t pay tax

“It’s better to have 500,000 tourists who pay tax than host two million who do not,” he opined

The ministry attributed the recent growth of the sector to among others, Tanzania’s stability and peaceful environment.

In the past three months, the monthly revenues for June, July and August was 12.99bn/-, 22.82bn/-, 22.15bn/- respectively for last year, while this year, the monthly earnings were 15.12bn/- , 25.58bn/- and 27.15bn/-.

Source: Daily News