Sunday, April 12, 2015

ARTICLE: African Union is targeting Tourism with more Taxes

In the almost-one year since "Africa in Focus" Show commenced on Radio XYZ93.1FM, the programme has discussed tourism many times. That our "Afri-Tourism" post has remained in the top 5 posts for many months (with 144 views so far), speaks to how important visitors to the website view tourism as important in a conversation around Africa's development. What few people know is that tourism has been identified by the AU as an important source of indigenous revenue for the continental organisation's work. 
It is true that alongside tourism is aviation, which is replete with many taxes, but without a doubt, in tandem, taxes on these two sectors could provide very predictable ways of resourcing an-otherwise donor-dependent AU. 
The following article touches on these points, with a focus on what some East African countries think of the whole idea. Happy reading!>>
When the breaking news was shared with selected tourism and aviation stakeholders in the region that the African Union had at their last summit, in a rather clandestine manner, smuggled in extra taxes on air travel and hotel accommodation in their budget proposals, the reaction was as expected, unprintable.
Some of the less stinging comments received were reflecting a bitter mood by stakeholders in East Africa, all affected by a downturn in tourism fortunes and in some cases struggling for sheer survival: “We will fight tooth and nail to stop this. The AU is a wasteful talk shop which has produced nothing tangible for the African people and now wants to eat more of our money. If they close down tomorrow, who will even notice it?” one regular source put it, while another more level-headed individual added: “Here at the Kenya coast, it is a question of survival now. We had to fight off greedy county governments trying to extort us with charges on beds which have remained empty for a long time. Their services are questionable, and their budgets for allowances and perks swallow up most of the tax revenues. Now the African Union also wants a share from what we don’t have? Where do these technocrats think that money comes from? They earn fat salaries, big allowances, and are totally removed from the reality on the ground. Have our Kenyan diplomats accredited to the AU even told them one word how bad our situation is? Arrival downturn in January [is] nearly 50 percent in Mombasa from an already bad 2014? Let the Heads of State dare to ratify these proposals. We will de-campaign that.”
Apparently a team of so-called experts have looked for the easy way out of the budget problems the African Union has encountered, largely by countries not paying their agreed contributions. Hitting air transport, already a highly-taxed economic sector in Africa, and targeting tourists with another hotel tax, perhaps seems to have found favors with bureaucrats who are not accountable to the general public, and the AU’s Director for Economic Affairs, one Mr. Kouassi, has been singled out as a key promoter of this new tax burden, no doubt incurring the wrath of Africa’s tourism and aviation industry.
It is understood that every tourist staying in a hotel will, should the proposals be passed in the mid-year summit of the AU, cough up a US$2 tax, while air tickets sold in Africa will incur a US$10 extra tax.
These tax proposals had in the past met with sharp opposition by the African Airlines Association (AFRAA_ and the United Nations World Tourism Organization (UNWTO). With Africa getting a measly share of the 1.1 billion travelers who criss-crossed the globe last year - only 56 million travelers came to Africa - any increase in taxation is seen as a further deterrent to increase those numbers significantly.
The continent, West Africa, and sub-Saharan Africa in particular, have suffered huge losses because of the Ebola factor. East Africa’s tourism industry is under siege, and in particular … Kenya [is] very badly affected by their internal situation. But it is Tanzania and Uganda, too, which have suffered from those factors. If tourism would perform well, one could even understand attempts to add or increase taxes, but right now, every added dollar in taxes is another nail in the coffin of the tourism industry. As far as air tickets are concerned, the big league airlines from the Gulf can afford to absorb that, but look at African airlines. South African is struggling for financial survival, Kenya Airways is struggling for financial survival, Egypt Air has not recovered from the revolutions which swept their country - how will they be able to compete when they have to add more taxes to their tickets? They cannot absorb it; they will become less competitive even, and instead of the African Union helping to build a strong African aviation industry, they are for all purpose helping to destroy it,” added a high-ranking aviation source from Nairobi.
Others reflected on the fact that the budget sourcing by the AU should be equitable and that these proposals will inevitably hit countries which have a tourism industry as opposed to others which do not, or even prevent tourism through prohibitive visa regulations and travel restrictions imposed on visitors, which in some cases restrict them to the capital cities.
Also targeted, according to the information received from a Ugandan source close to those proceedings, was the communications sector with unspecified charges proposed, which will no doubt further infuriate the business community and turn them against the AU bureaucrazy, pun fully intended, which ought to go back to school and learn budget discipline and how to prune wasteful spending instead of burdening Africa’s already overtaxed people and business yet more. Details, that the AU faces a budget gap of some 70 percent which needs filling from foreign partners, often partners AU member states verbally rip into at every given opportunity, is perhaps the best pointer how the African Union needs to start with reform and with bringing member countries to make their contributions, lest the continental body falls into even greater irrelevance

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