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Tourism gets raw deal with no tax incentives in Budget

CARTOON
By | June 10th 2011

Iqbal Karim

Tourism is a leading foreign exchange earner, a major generator of employment and contributes up to 10 per cent of Kenya's Gross Domestic Product (GDP). The Tourism Strategic Medium-Term Plan seeks to quadruple this figure, doubling international arrivals and average spending by visitors, trebling revenue and increasing number of hotel beds by 2012.

It was therefore disappointing that Finance Minister Uhuru Kenyatta offered no specific taxation incentives to boost the sector.

He allocated Sh800 million to the Kenya Tourist Board (KTB) for marketing and promotion. This pales in comparison to Egypt ($100 million), South Africa ($100-$120 million) and Tunisia ($48 million).

Secondly, tax waivers on tourist vans, and freezing of game park entrance fees for a couple of years, as in Tanzania, would have helped. No measures were announced to promote domestic tourism, not even tax breaks for local travellers such as deduction of a maximum of Sh30,000 to Sh50,000 in travel expenses from personal taxable income, for example. This would cover accommodation bills, package tours and other services. In our current economic environment, the Minister should have given specific tax breaks to key international players wishing to invest in tourism. This, coupled with other fiscal incentives to promote other forms of tourism such as golf, eco-tourism and others would have been very useful. Perhaps Uhuru is waiting for the necessary infrastructure to be in place so the country has a more positive image abroad to attract tourists, investors and entrepreneurs.

But maybe the Minister is more keen on addressing the woes felt by wananchi.

The writer is a Partner with Deloitte Kenya

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