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Tanzanian will not remove VAT on tourism services: president

Xinhua, July 19, 2016 Adjust font size:

Tanzanian President John Magufuli on Monday insisted that the government will not remove the 18 percent Value Added Tax (VAT) charges imposed recently on tourism services despite the reported drop in number of tourists visiting the east African nation.

Magufuli made the statement at State House in the commercial capital Dar es Salaam shortly after 59 police officers he promoted on Thursday signed the integrity pledge.

"It is better to have 500,000 tourists who pay taxes than to have 2 million tourists who do not pay taxes," said President Magufuli in response to stakeholders in the tourism industry who said the 18 percent VAT imposed by the government was likely to affect the number of tourists visiting the country.

He added: "It doesn't make sense for the country to have big numbers of tourists who pay nothing. We should benefit from their visit to our country."

Magufuli said the impending reduction in number of tourists will not stop the government from implementing its development agenda.

On July 8, a European Union (EU) tourism organization said Tanzania's tourist arrivals from the bloc could plummet by 50 percent over the introduction of the 18 per cent VAT on tourism services.

The European Travel Agents' and Tour Operators' Associations (ECTAA) said in a statement its member countries accounted for 50 percent of all tourists who arrive in the east African country and whose planned trips could now be cancelled over the additional cost.

In monetary terms, the loss of 50 percent of tourists would mean Tanzania losing an estimated 1 billion US dollars in foreign currency earnings if data from the previous year's trading was anything to go by.

On 1st July, Tanzania enforced VAT on tourism services, inflating its tourism products for 25 percent more than similar offerings from the region.

Tanzania Association of Tour Operators (TATO) said that before introduction of VAT the Tanzanian destination was considered 7 percent more expensive, compared to Kenya, Botswana, South Africa and Angola.

So far about 8,000 tourists have called off their vacations to Tanzania, denying the country 660,000 U.S. dollars in lost revenue, said TATO in a statement.

Available data shows that tourism provides 600,000 direct jobs to Tanzanians; over 1 million people earn an income from the industry not to mention the value chain which supports, parks, conservation areas and now community based wildlife management areas. Endit