VAT protests rattle Tanzania’s tourism minister

A clearly rattled Tanzania’s Minister for Natural Resources and Tourism has signalled his readiness to sit down with the country’s tourism industry, which is up in arms over the government’s decision to heap an 18 percent VAT on tourism services.

The vehemence of the protests and dissent has taken the government by surprise and has reportedly poisoned relations between private and public sector to a point, where the industry is now considering to withhold goodwill and cooperation, until their grievances have been addressed and the contentious VAT has been removed.

With thousands of bookings, according to sources close to the main tourism trade associations, already cancelled and European tour agencies threatening to cut Tanzania out of their sales promotions as a result of their clients being asked to cough up hundreds of added dollars for their safari holidays, have Prof. Maghembe’s assertion that tourism arrivals continue as usual perceived as ‘delusional and far from reality’.

The situation reminds of what happened in Kenya some years ago, when the government heaped a 16 percent VAT on tourism services and the Kenyan Cabinet Secretary at the time also denying any impact on the industry, something she came to regret when arrivals dropped even faster than before the ill considered tax measure.

Leading Tanzanian stakeholders in the tourism industry have sought audience with President Magufuli to discuss the measure and hoped for a reversal of the position taken by government, but should this not happen, it is anyone’s guess what the relationship between government and private sector will be like over the coming months.

Sources in Arusha and Dar es Salaam have indicated that they will monitor whether the talks indeed materialize between Prof. Maghembe and key tourism association leaders and what the outcome will be.

However, should the arrival numbers go soft in coming months, following the introduction of the 18 percent VAT, there will be an almost inevitable call by the industry to sack their minister for not listening to the sector and being, together with the Tanzanian Finance Minister, responsible for wrecking the contry’s tourism industry.