Fresh tax assault on Uganda tourism in the making

Tourism sources were swift to condemn revived plans to slap the sector with an 18 percent VAT for upcountry accommodation, saying that “together with another planned tax rise on fuel this will make

Tourism sources were swift to condemn revived plans to slap the sector with an 18 percent VAT for upcountry accommodation, saying that “together with another planned tax rise on fuel this will make Uganda’s tourism products a lot more expensive at a time when the country faces global opposition and de-campaigning over the recently passed ‘anti-gay’ and ‘anti-miniskirt’ bills.”

Added another regular source: “We shall wait for the budget proposal to be read. If however these proposals go through and the funds allocated to tourism for promotion are not upped considerably at the same time, we will finally know that this is a government which has and continues to let the tourism sector down very badly and no amount of words will be able to appease the discontent this will raise. We in tourism have gotten a raw deal over the years and there is no point in blaming the UTB or the ministry because their hands and feet are tied by laughable budget allocations. Yet it is common knowledge that tourism could be the answer to so many economic challenges Uganda has. We as a sector can create jobs, bring investment, earn a lot of foreign exchange, but not this way, not by constant neglect and always new higher taxes and more fees.”

News emerged yesterday that members of the ruling party had reacted to the withdrawal and withholding of donor and development partner funds, which left a serious hole in the national budget, by proposing a wide range of new and increased taxes to fill the gap.

Wananchi, the Kiswahili word for local people, too are in for a rude shock as the plans include a rise of 200 Uganda Shillings in the cost of Kerosene, still a widely used method to light houses in the evening – only about 10 percent of Uganda’s households are connected to the notoriously unreliable electricity grid which already charges exorbitant tariffs and is seeking yet another rate increase – while the party members also reportedly targeted milk products, a move which if implemented would hit the country’s ranchers as well as consumers with a further rise in the cost of a packet of milk by 18 percent. Another common commodity, sugar, was also singled out for higher taxes, raising the spectrum of a tough financial year 2014/15 ahead for the Ugandan people and the Ugandan tourism industry, where the mentioned items constitute a major portion of inputs, fuel for the safari vehicles and milk and sugar for purchases in hotels, resorts and safari lodges.

What goes around comes around is perhaps the most appropriate phrase, as the reality is sinking in now that the two pieces of legislation do after all have consequences and that hasty efforts to mitigate the loss in financial support will make life in Uganda a lot more expensive come the new financial year which starts on July 1.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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