Regardless of the pressure mounted by the members of parliament over Tanzania government’s aim to increase and include new taxes within services plus consumer products, the Tanzanian government has supported an unfavorable tourism budget aiimed at hurting the tourist industry of Tanzania.
Opposing the yearly budget which will occur next Monday, 1st July, several parliamentarians questioned the government over its purpose to raise tax plus levies on consumer products such as soft plus alcoholic drinks, fuel as well as services.
William Mgimwa the Tanzania Finance Minister, had requested parliament’s approval to increase taxes which will enable the government to acquire US $100 million.
However, investors within tourism faulted the suggested tax reforms for this industry stating that if approved, they would get a damaging effect.
The Tanzania Association of Tour Operators had contradicted the government’s turn to add a Value Added Tax (VAT) on all tourism products.
Mr. Mustafa Akonaay the Executive Secretary of the Association said that It is about time country organizations understood that tourism products, such as game viewing within national parks, luxurious accommodation within tourists hotels, plus other alike packages must be handled as ‘exports.’ That’s the reason why they are actually charged in dollars.
He added that it was not right to bill VAT on goods intended for export, such as tourist services, mentioning that normally tourists don’t take anything overseas; they actually just visit to view the wildlife and even leave.
The tour operators executive cautioned that VAT on the tourism products would turn Tanzania into an extremely expensive safari destination, so foreigners may begin deciding on other countries that offer more affordable safari prices.
Tourism associated segments that are likely to be susceptible to Value Added Tax (VAT) include tour-guided game viewing, bird watching, water plus sea sports, accommodation, animal watching, park fees, transit services, tourist associated chatter services in addition to ground transport.
However For tour operators, , this move will make the tourism industry of Tanzania a hard hit, turning the destination into an uncompetitive place.
Tourism investors mentioned the elimination of tax exceptions on payments regarding aircraft lease rentals as well as the scrapping of VAT exemption on the tourism services will damage the industry. Many fear that prospective tourists could terminate their trips to the country.
Reviews further stated the government’s decision to remove tax exemptions on the tourism industry has increase doubt in the European tourist stakeholders that are leaders for bringing in tourists that visit Tanzania. in fact The European Association of Travel Agents and Tour Operators cautioned of its intension to cancel itineraries this year to Tanzania .
With such arrangement, the European tourists won’t be in a position to get VAT returns as they leave Tanzania at the end of their safari.
the yearly Tanzania budget went through recently by parliamentarians from Chama Cha Mapinduzi the ruling party who voted by raising their hand. Hardliners