Julian Asher, the founder of Timeless Africa based in London, says that Tanzania’s implementation of 18% VAT on tourism services 15 months ago (combined with this year’s concession fee) has left travellers with the perception that they are being ‘milked’. “Our clients are wary. News of unanticipated Tanzanian taxes has spread by word of mouth amongst consumers and left a bitter taste.”
In the initial months after the tax was implemented, travellers who had paid for their tours in advance were suddenly hit with a last minute fee, which doubled up when the concession fee was introduced.
“These clients have budgeted in advance and paid peak season rates, the last thing they want is to suddenly have to cover another fee.”
Asher adds that the biggest concern amongst travellers was that there was no lead time before implementation and that there is no clear indication of what the money will be used for. He called for more consistency
“As tour operators we are concerned that we might sell Tanzania this year and get hit with another poorly implemented tax next year. In this instance, we will have to build it into the cost of the package which will raise the price for the consumer. This is unfortunate because we want to be able to sell Tanzania competitively, however, we cannot afford to cover the cost internally on an ongoing basis.”
Sirili Akko, CEO of the Tanzania Association of Tour Operators, says that, as of yet, no study has been conducted on the impact that the VAT implementation has had on Tanzania’s tourism industry. He adds that the only existing record of the trends which have taken place, comes from safaribookings.com.
“I acknowledge that this is a wakeup call for us to conduct a study on how this has impacted the businesses of our members. Plans are underway to commission a study to establish the ripple effects of the VAT implementation, if any.”
He says that while the trends from safaribookings.com show that VAT had an impact on the Tanzanian tourism industry, it is hard to quantify because concrete data is lacking. “In the first few months it was really tough as the tax had to be absorbed by either the operators, agents, tourists, or all parties collectively, depending on arrangements in place. Only as time passed were we able to properly communicate the tax requirements to the international agents and transfer the cost to the tourist in a more sustainable manner.”
John Corse, Managing Director of Serengeti Balloon Safaris, says that despite this setback Tanzania’s tourism industry has shown growth in the last year. Adding that the elasticity of the market will determine whether or not the VAT will effect Tanzania going forward.
