Investors want State to increase tourism funding

By Patrick Beja

Players in the tourism industry want this year’s Budget to set aside more funds for marketing and reinvestment.

Under the umbrella of Pubs, Entertainment and Restaurants Association of Kenya (Perak), the stakeholders want the Government to cast its net wider and extend the collection of the catering levy to all bars in urban areas in the country so as to raise revenue to develop tourism.

Perak urged Government to subject the catering levy to anyone who sells alcohol since it is a luxury drink.

"In essence we propose that the association could assist Government to widen the tax net to include all bars in any municipality or major towns," said Sam Ikwaye, Perak chief executive officer.

Mr Ikwaye, who was flanked by the Perak national Treasurer Lucy Khor said less than a third of all tourist establishments pay value added tax and catering levy denying the Government and the industry revenue for service delivery and reinvestment.

Addressing a press conference at the Canton Chinese Restaurant in Mombasa yesterday, the officials said widening the tax net to cover all establishments could raise more funds for development the tourism products.

Hospitality tax

To cushion new VAT and catering levy contributors, the tourism stakeholders proposed that the VAT levied on the hospitality industry be reduced from 16 per cent to 10 per cent.

"VAT reduction is also a direct way for the Government to give back to hotels and restaurants sufficient funds to reinvest and consequently attract more visitors," Ikwaye said.

"The ripple effect will be more revenue collection by the Government, and will endear Kenya to external investors keen on investing in the industry," he said. Perak also wants a shift from using the catering levy to train staff and invest in tourism development.