Survey reveals that gvt VAT cost could scare away visitors
Published: 2016 February 16 05:54:57 (5198 Views)
RESEARCH has shown that three quarters of tourists who recently visited Victoria Falls would not visit Zimbabwe again if the cost of accommodation, which is already high, is increased by more than 5 percent.
Hospitality operators have been subjected to 15 percent valued added tax on foreign visitors’ hotel accommodation since January 2015. But the majority only passed on 5 percent of the cost to the visitors to avoid losing business in what would have seen one of the economy’s few strong performing sectors going into a decline spiral.
The study showed that tour operators in Zimbabwe have already started feeling the impact of the tax with profits falling by between 10 and 15 percent, depending on the extent to which they absorbed the cost.
Hotels and lodges have on average registered decline in profits by about 27 percent last year compared to 2014, a development the businesses attributed to absorbing the additional cost.
In an effort to scientifically assess potential negative impact of the policy, the Zimbabwe Council for Tourism commissioned Zimbabwe Economic Policy Analysis and Research Unit to carry out a study.
The study, based on views gathered from 145 tourists in Victoria Falls found out that 75 percent of visitors to the resort would not visit Victoria Falls again if accommodation rates are hiked by over 5 percent.
As such, the study concluded that there is need to reduce the VAT on foreign accommodation sales, one of the few performing exports, to a rate lower than 15 percent as in Kenya, which levies 14 percent.
Already, Zimbabwe is now relatively a more expensive destination for tourists compared to regional countries due to an overly strong dollar, previously offset by exemption of local operators from the tax.
- Herald
Hospitality operators have been subjected to 15 percent valued added tax on foreign visitors’ hotel accommodation since January 2015. But the majority only passed on 5 percent of the cost to the visitors to avoid losing business in what would have seen one of the economy’s few strong performing sectors going into a decline spiral.
The study showed that tour operators in Zimbabwe have already started feeling the impact of the tax with profits falling by between 10 and 15 percent, depending on the extent to which they absorbed the cost.
Hotels and lodges have on average registered decline in profits by about 27 percent last year compared to 2014, a development the businesses attributed to absorbing the additional cost.
In an effort to scientifically assess potential negative impact of the policy, the Zimbabwe Council for Tourism commissioned Zimbabwe Economic Policy Analysis and Research Unit to carry out a study.
The study, based on views gathered from 145 tourists in Victoria Falls found out that 75 percent of visitors to the resort would not visit Victoria Falls again if accommodation rates are hiked by over 5 percent.
As such, the study concluded that there is need to reduce the VAT on foreign accommodation sales, one of the few performing exports, to a rate lower than 15 percent as in Kenya, which levies 14 percent.
Already, Zimbabwe is now relatively a more expensive destination for tourists compared to regional countries due to an overly strong dollar, previously offset by exemption of local operators from the tax.
- Herald
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