VAT erodes tourism volumes: ZCT

via VAT erodes tourism volumes: ZCT | The Herald October 22, 2014

Tourism operators registered a 32 percent decline in forward looking bookings in the nine months to September due to the impact of the 15 percent value added tax on export sales of accommodation, the Zimbabwe Council for Tourism has said. ZCT president Mr Francis Ngwenya made the remark in his opening speech at council’s two-day congress that ended in Harare yesterday.

He said the tax had potential to destroy the little growth achieved thus far.
“While this might give us immediate returns, it has the impact of destroying the little growth we are registering currently. In our baseline year in 1999, we received in the region of 600 000 from lucrative overseas markets, currently we are getting 260 000,” he said.

Mr Ngwenya said the current figures were well below the targets for the tourism industry, which ZCT and Government continue to invest in to regain market share.
“We need volumes, and pricing is key to attract tourists to this market. The tax incentive on the accommodation element of the tourists cost is effective especially when one is working to lure back tourists with many options.

“Since this has not been resolved, we are seeing indications of a massive decline in forward bookings through our tour operator channels. By this time last year one tourism operator had registered 1 781 forward bookings and yet for 2015 they only have 1 219 bookings for the same period, a drop of 32 percent.”

Mr Ngwenya said tourism could contribute more to economic growth if operators were allowed to retain the tax on accommodation since accommodation constituted less than half the amount tourists spend on holiday. Government has targeted to grow tourism into a $5 billion industry, raise its contribution to gross domestic product to 15 percent and grow arrivals to 5 million by 2020.

“We congratulate Government for the e-visa, which despite some technical and manpower challenges, has taken us into the modern world and we look forward to a flexible visa regime for tourists from Brazil, India and China who have to apply . . . in own countries.”

Zimbabwe will first apply the uni-visa system with Zambia and expects to start next month. After that, the uni-visa will be extended to the rest of Sadc.