‘New tax law to dampen tourism’

via ‘New tax law to dampen tourism’ – DailyNews Live 3 FEBRUARY 2014

Zimbabwe’s hotels will become uncompetitive while recent improvements in tourist arrivals may be reversed if government’s plan to extend value added tax (Vat) to non-residents goes through, industry players warned.

Glenn Stutchbury, Cresta Hotels’ chief executive, said the imposition of the levy will effectively increase prices by 15 percent, rendering the country noncompetitive as a tourist destination.

Consequently, the hotelier said, foreign visitors’ numbers into the country will be reduced.

“Such a development would be a setback for an industry slowly climbing out of a decade-long recession and would hinder the travel and tourism sector’s drive to increase visitor arrivals and thereby increase foreign currency earnings by the sector,” he said.

In the recent 2014 National Budget, Finance minister Patrick Chinamasa proposed that Vat be imposed on payments for accommodation and services by foreign tourists, a major reversal of the longstanding policy of not doing so.

However, hotels operating in the country are opposing the move and urging a rethink, in the best interests not only of the travel and tourism sector but of the whole economy.

Stutchbury noted that hoteliers were embarking on an exercise to engage the authorities in discussion on the issue and gain a shelving of the plan for a minimum of five years.

Until now it has been national policy not to charge Vat on foreigners payments of accommodation and tourism-related services and when the Vat system was introduced in 2003 the travel and tourism sector was recognised as an exporter, exempt from Vat on foreign visitors’ payments.

Stutchbury said the sector now felt strongly that after a slow but determined emergence from a 13-year period of depressed trading, the time was not right to undertake action that would have a detrimental effect on growth.

Such an impact would result in a drop in tourist arrivals with consequent reduced growth for the travel and tourism sector and either stagnation or reduction in employment levels.


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    vukani madoda 9 years ago

    The hoteliers are very unconvincing in their arguments.I have travelled far and wide and consider the Tarrifs at some of our highly priced hotels do not give value for money-remember what happened to our hotels during the Footbal World Cup in South Africa?.The staffing ratios at many of tem are far too high and they need to cut costs through efficiency saving.The 15% increase should be a challenge for the hotels to raise the value for money by improving service and quality of meals. There is scope to enhance easy bookings/payments using electronic media and this will cut costs too.The honorable minister has a difficult task to raise money and if no one wants to pay where on earth is he suppossed to find it.The distorted salaries much talked about elsewhere lately probably exist in the hotel industry as well and it’s high time high earners earned their money and they have to face up to these challenges

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    Ruramai 9 years ago

    Vukani Madoda, it is unusual for a government to tax foreigners. The world over foreigners are exempt from taxation for the simple reason that they do not benefit long term from services that a government provides to its citizens.

    The government can grow the national tax base by doing what other countries do – employment creation. This could easily happen if Zimbabwe came up with economic policies that encourage foreign direct investment.

    One thing that needs to happen is the protection of property rights. You cannot have investment if you constantly threaten to seize other people’s properties.

    The minister could also look at taxing the new commercial farmers, starting with his own wife Monica, a very successful tobacco farmer. There’s plenty money in Gushungo holdings too!

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    John Thomas 9 years ago

    These ZANU types should start paying tax starting with the President and the minister of finance. This would solve much of the problem.

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    Tafadzwa 9 years ago

    Economic illiteracy is the biggest challenge. Zimbabwe government should not think the world owes you a living. Tourist will pay by their legs- not showing up if neighbouring countries offer more for the same dollar. The question is do other countries charge this VAT ? If the do then Zimbabwe should follow suit, otherwise tourism will dry up.

    The same with foreign investments- why should an investor come to Zimbabwe if other SADC countries offer security of investment, and your Zimbabwe is always threatening investors ?

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    Rukweza 9 years ago

    Zimbabwe is expensive with or without the tax

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      Recently a colleague visited Zim for the first time, as a short trip out from a holiday in South Africa, and she felt Zim was a rip off for tourists – she felt that tourists were being heavily taxed for visiting the country. She said she will no go again. What a shame people are put off in that way.

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    If the zanupf govmunt want money they need to shake down their zrp goons who fleece the tourists entering and leaving zims by road.

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      Tawanda 9 years ago

      @zim reeper — how funny do you think you are using a stupid word like that? Doesn’t this site have a moderator?

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    vukani madoda 9 years ago

    The finance Minister is looking for ways to tap into the riches of our visitors who come in from relatively richer countries who have more cash to spare than the locals.Call it what you may-levy or exraordinary tax it doesn’t really matter-it boils down to service and value for money-that is all the tourist is looking for.Of course you will expect the hospitality business to resist this as it potentially dips into their profit margins but there is scope to overturn any potential losses by improving the quality.I have just looked at my recent hotel bills-one from a South African hotel and anoher from a hotel in Europe and on both there is either VAT or some sort of levy-there is nothing new or amiss about these levies

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    MikeH 9 years ago

    Now, the last time I was in Zimbabwe was 15 years ago and I have no intention of returning anytime soon, though I would dearly like to do just that. Am I alone in saying my reason for not returning is purely down to taxation and value for money, I doubt that very much !!! In fact the sole reason for staying away is mugabe&co and what they have done, and continue to do, to the country and it’s people. I am certainly not bothered about paying VAT, which is a fairly global thing anyway.

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    machakachaka 9 years ago

    Does this country benefit more through taxing foreigners or we benefit more otherwise? Is it Gershom Pasi and his lot who have proposed this, or it is Chinamasa, or both such Pasi and Chinamasa?

    Tourism is important, because we do not benefit only cash, but also favourable perceptions, and positive perception is good for investment.

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    The current situation exist because the industrial side of the economy has been eroded to unexceptable levels. The Government encouraged a bigger informal sector which they now find they cannot collect tax from.Ruramai is right . If this Government does not see that job creation is the key to have a strong tax base then they will only go backwards. If they do not see that attracting foriegn investment without the tough measures thay have put in place they will carry on with the begging bowl. If they start charging foriegners tax for coming on holiday they will stop comming and more jobs will be lost. But then again will they ever listen to anyone.?

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    Let’s see the tax returns of all the fat cats first. One thing I know when all this rubbish has come to an end I would not want to be a fat cats as the people will seek street justice. Then maybe people in power will think twice before deceiving the people again.

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    Only Fools 9 years ago

    The moment a tourist sets foot in Zim they ripped off. Whether its the ride to town from airport. A hotel that charges international prices but deliver 3rd world service, or a basic meal in a restaurant. The tourists get ripped every turn,. We then complain when they don’t return !!!

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    Marondera 9 years ago

    Vukani Madoda do you actually live in the real world, most forigners are already Paying 100% tax for a flight to Zimbabwe and to pay tax on hotel accomodation becomes really expensive no matter what country your from. Looking at the news over the last few days it seems Zimbabwe has some of the most well paid people in the world, why not tax them?
    What has Zimbabwe got to offer that our neighbours haven’t? Want to see Vic Falls go to Zambia, want to go a be amounst wild life got to Kruger.
    The only people silly enough to pay these prices to visit Zim are those who have to visit family and in most cases this can only happen once every other year due to the expense.
    Before you fleece forigners of their cash, perhaps we should look at fleecing those who earn their money through corruption (Government, Police, Army and the Chinese)