WTTC argues against Tanzanian tourism tax increase

World Travel & Tourism Council president David Scowsill has criticised an increase in VAT applied to tourism goods in Tanzania.

The head of the global forum for business leaders argued: “If tourism services in Tanzania are going to be subject to a substantial increase in VAT in the next VAT Bill, this will have a detrimental impact on the country’s economic growth.”

He continued: “WTTC’s research shows that taxation on tourism of this kind results in job losses and a curbing in demand and as in other countries and regions around the world, this would be counter-productive to the Tanzanian economy.”

While acknowledging revenue has to be raised in the African destination, Scowsill argued the decision would negatively affect overall tax level.

He continued: “We appreciate that revenue needs to be raised. 

“However, if the VAT exemptions are to be removed for tourism services in the new VAT Bill, this will negatively affect the tourism industry in many ways, including game drives, park entry fees, tourist guiding, water sports and tourist air charter services.”

Tourism is a major pillar of the Tanzanian economy contributing to economic growth and job creation.

The Industry contributes TZ S6,899.5 billion or 12.9 per cent of total GDP and accounts for 1.2 million jobs or 11.2 per cent of total employment.

Scowsill added: “However, the need to maintain the ‘Exemptions on Tourism Services’ in the next VAT Bill seems to be falling on ‘deaf ears’.

“If the exemptions on tourism services are removed, Tanzania should expect a resulting loss in sales/bookings, a cancellation of bookings and a loss of jobs.

“This is completely counter-intuitive to the purpose of raising money and boosting the Tanzanian economy. 

“WTTC strongly urges the Tanzanian Government to reconsider, and not go ahead with, removing the VAT exemption for tourism.”