GOVERNMENT has postponed the introduction of the 15% Value Added Tax (VAT) levy on tourism operators to January 2015 following an outcry over the new measures which threatened the growth of the sector, Tourism and Hospitality Industry minister Walter Mzembi has said.
Business Reporter
Tourism operators had complained that besides rendering Zimbabwe an expensive destination, the new tax regime would disadvantage international buyers and travellers who had already booked to come to the country.
“It means we have given industry a one-year reprieve from November last year. It is universal practice. The operators, going forward, must convince us that they can do much more with another dispensation than they have been doing to date,” Mzembi said.
The cash-strapped government last year proposed introducing the levy in the National Budget in a bid to tap into the revenues of the tourism sector which has slowly been recovering since the inception of the inclusive government in 2009.
Finance minister Patrick Chinamasa made the proposal in the 2014 National Budget presented in December last year.
“It’s a question of cost-benefit now. What I would hope going forward is that we don’t tax the people upon entry into the country,” he said. Mzembi said there was need to weigh this against passenger taxes and other issues that may serve as a disincentive to arrivals.
He said heavy taxation would only make the country uncompetitive.
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Mzembi called for a national conversation in future with stakeholders and authorities involved in collecting taxes from the Zimbabwe Revenue Authority, the Civil Aviation Authority of Zimbabwe and those manning entry points, among others.
“At entry, do they stimulate inbound travel or they discourage arrivals? We would rather tax them when they are inside the product,” he said.
Tourism operators had earlier this year warned that the VAT which government had levied on the sector late last year would result in more foreign visitors cancelling international bookings to Zimbabwe.
The tourism industry’s contribution to the economy is expected to grow to 15% by 2015.
Government introduced VAT in 2003, but the tourism sector was exempted from tax payments as it was duly recognised as an exporter.
Experts argued that reintroduction of the levy would be regressive following gains made in the tourism sector over the years.
