Hospitality sector decries foreign currency levying

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LEVYING duty on non-productive goods in foreign currency will paralyse the operations of tourism players who rely on the commodities to viably sustain their operations, businessdigest has learnt.

By Kudzai Kuwaza

In his 2019 National Budget presentation in November last year, Finance minister Mthuli Ncube imposed duty in foreign currency on a number of products which have been branded luxuries. These include grapes, fruit juices, cheese, shrimps, prawns, wines and margarine.

Tourism Business Council of Zimbabwe CE Paul Matamisa told businessdigest recently that the decision to charge duty in forex will trigger price increases across the sector, thereby making the country less competitive as a destination.

“The so-called luxuries are not luxuries for the tourism sector,” Matamisa said. “When tourists come to the country, they are not coming to forgo what they are used to having so we cannot be talking about luxuries. We are actually adding costs to the sector because businesses will pass the cost to the consumer which will make the destination less competitive,” he said.

“This is especially so when you compare us with our colleagues who charge in the South African rand while we charge in US dollars.”

Matamisa said the sector would engage government on the issue.

He said the tourism sector is still in talks over the 15% value-added tax on tourism which they say has made the Zimbabwean product more expensive. The cash-strapped government in January 2016 unilaterally introduced the levy on foreign tourist accommodation in a move seen as a desperate measure to augment the government’s dwindling revenues.

This was despite appeals and protests from stakeholders in the tourism sector, who viewed the tax as tantamount to choking them out of business.

Matamisa said there were about 18 tourism investment projects on the cards, of which 12 are based in Harare and others in Victoria Falls.

He said the country must work on upgrading tourism facilities, some of which have deteriorated over time, if they are to compete with the tourism sector in neighbouring countries. Matamisa said the sector needs a revolving fund from which operators can borrow at interest rates which are not punitive.

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