Uproar over Najib Balala's bid to transfer agency's mandate on levy to KRA

Business
Tourism Cabinet Secretary Najib Balala spoke when he received donations towards Tembo Naming Festival. [Wilberforce Okwiri,Standard]

A government decision to strip the Tourism Fund (TF) of the powers to collect a two per cent levy from hotels and restaurants has been opposed by a section of stakeholders who have said the move would kill the sector.

The tax, known as Tourism Levy, is charged at the rate of two per cent on the gross sales derived from the sale of accommodation, food, drinks, and all other services offered in scheduled establishments.

Owners of regulated tourism activity and service, under the Tourism Act 2011 schedule nine class A & B, pay a tourism levy, and the mandate of collecting the money is vested in the TF.

Now, stakeholders want the new government to reject the decision by Tourism and Wildlife CS Najib Balala and allow TF to continue collecting the levy on its behalf.

In a letter to the Head of Public Service Joseph Kinyua, Balala initiated a process of transferring the collection of the levy to the Kenya Revenue Authority (KRA) as part of the ongoing restructuring of his ministry.

In the July letter, Balala said KRA would be more efficient in the task. 

The move to hand over the collection of the levy to the KRA came as more State agencies sought to outsource the services to KRA, which is seen as more efficient in the task.

“This letter is, therefore, to update you on the action taken by the ministry and to request you to communicate to Kenya Revenue Authority to take immediate action on the collection of the tourism levy by the Tourism Fund,” read part of the letter.

Speaking yesterday, Tourism Professional Association secretary Sam Ikwaye said it would be illegal to go ahead with Balala’s plan.

“The functions of TF have been premised on the sector’s specific Act of Parliament that mandates the fund to collect the tourism levy, among other national objectives.”

Dr Ikwaye added: “A transfer of this function needs an amendment of the same Act. A consideration to have the amendment made by parliament with public participation is thus necessary before actualisation of the proposal otherwise, there shall be a conflict with statutes that guide KRA.”

He said TF has sensitised the levy agents on a self-service automated portal and it has also noted that the fund is operating an innovative self-serving portal that is customised to help in the collection of the tax as per the sector’s specific law.

“Coincidentally, it has been established KRA also uses the same revenue management system, and therefore, no value will be realised from the arrangement,” Ikwaye said.

He said stakeholders are questioning the timing of Balala’s move. 

Ikwaye said they wondering why the matter appears urgent to the CS and accused him of tossing around parastatals in the sector. 

He added: “We must follow the law even as we seek to make changes in the industry. The wish of stakeholders is for the new administration to take office and settle in first then we can address this matter with it. We feel we will have enough time to engage on the matter.”

Mr Titus Kangangi, a former Kenya Association of Hotelkeepers and Caterers official, said: “The move to take away rights to collect levy from TF to KRA will effectively kill tourism. It means the facilitation we used to get from TF in terms of training and development is gone. How shall we build the capacity of the people who work in the industry? The sector will miss out if this levy is transferred to KRA,” said Kangangi.