The Kenya Association of Tour Operators (Kato) is circulating a petition to revoke the VAT imposed on tourism services last year. The petition is targeted at the country’s president, Uhuru Kenyatta.
Fred Kaigua, Chief Executive of Kato, says the petition is one of a series of strategies that the association’s Recovery Committee has devised. It is set against a decline in tourism, as the country’s industry reels under the effects of security incidents, negative media reports and ensuing travel advisories.
In September last year, a number of previously exempt tourism services, including tour operator services and park fees, were subjected to a 16% VAT charge as part of the VAT Act 2013.
The petition states that the imposition of VAT “came at a very wrong time when the destination is suffering from the effects of negative publicity.”
It highlights four concerns, the first or them being the lack of lead time to communicate changes in quoted costs to clients and agents, affecting forward bookings made up to a year in advance. It also points out that Kenya, as one of the few countries imposing VAT on tour operations in East Africa, is now at a competitive disadvantage – Tanzania and Uganda both recently shelved similar VAT proposals.
The petition further points out that tour operators fall into a category of providers known as ‘intermediary services’, and other sectors in the category, such as coffee and insurance brokers, are exempt from VAT. Lastly, it cautions about economic impacts – “a continued downturn in tourism will adversely affect several sectors of Kenya’s economy due to the high level of backward and forward linkages.”
The petition is posted online can be viewed here. Supporters of the document have highlighted the possibilities of loss of jobs and livelihoods, along with regional competition for the tourist dollar, should VAT not be revoked.
“VAT is a consumption tax, and incentive for the buyer to limit spending. The last thing we need today in the tourism sector is to discourage consumption. If anything, what we need is a shot in the arm to encourage people to spend more,” writes one signatory.