BULAWAYO, May 8 (The Source) – Tourism Minister Walter Mzembi on Thursday said he is still lobbying the Ministry of Finance to remove a 15 percent tax charged on accommodation for foreigners, which is seen hitting tourism earnings this year.
Zimbabwe’s tourist arrivals increased by 2,6 percent to 1,880,028 in 2014 from 1,832,583 recorded the previous year, but the figure was still below the overall regional growth rate.
The country recorded a marginal three percent decline in total annual earnings to $827 million from $856 million in 2013.
Finance Minister Patrick Chinamasa last year introduced value-added tax (VAT) on foreign tourists’ payments for accommodation and tourism-related services, as the cash-strapped government scrambled to raise revenue. The tax came into effect in January 2015.
Mzembi has said the tax move is “not intelligent” as it would only make the country a more expensive destination for tourists.
“We are actively engaged with Ministry of Finance on the 15 percent VAT issue on foreign accommodation. The decision, although now binding, was unilaterally imposed on the sector before we had concluded consultations on a cost benefit and opportunity cost analysis,” Mzembi said.
“The sector and myself still believe that it’s early days to impose such a full-blown tax on foreign arrivals that we are still trying to recover.”
Mzembi said “intelligent taxation would seek to promote the recovery of the sector through an incremental formula that does not kill the goose that lays the golden egg or punish people for visiting.”
“I often hear arguments about Zambia or that other countries are doing it. Why not us, but really, we are coming from different backgrounds given our history of a country under sanctions, at least in the travel market, until 2009.
“So we need taxation creativity in other areas that do not constitute a barrier to entry and growth of the sector,” he said.