Ministry touts new levy on airlines to generate funds

By John Njiraini and Lucieanne Limo

Tourism ministry has proposed a new levy on all airlines using the country’s airports to raise marketing funds. This proposal comes after it became apparent that Treasury is unwilling to commit more funds.

Tourism Minister Najib Balala told The Standard that the ministry is pushing for a $10 (Sh1,000) levy on every airline departing from Kenyan airports.
The minister’s sentiments came as the country celebrated the World Tourism Day in Baringo, on Tuesday.

If cleared, the ministry hopes to raise an extra Sh3 billion annually considering there are about three million departures per year.
The Ministry of Tourism receives Sh600 million annually from Treasury to finance its operations and market the country.

“I have told the Government to introduce a new levy so that we can get money for marketing. I hope this can be effective from January 1, next year,” said Balala.
He said Kenya would not be the first because most European countries have introduced a levy on airline departures. The UK, for instance, imposes a £75 (Sh11,850) on every departure while Germany has imposed €30 Deutchmark (Sh4,140).
The proposal comes after appeals by the ministry to Treasury for an increase in allocation failed to yield any results.

“We need at least Sh4 billion for marketing but despite several appeals, we only get Sh600 million from Treasury,” said Balala.

Vision 2030

In the first half of this year, the sector  raked in Sh40 billion. It is now projected that the sector could cross the Sh100 billion mark in earnings by the end of this year.
Balala said the sector, which accounts for 10 per cent of the Gross Domestic Product, is gearing for drastic transformation in the coming years following the signing into law of the Tourism Act by President Kibaki last week.

Balala added that plans to immediately roll out the implementation process of the Act, which provides new direction in the development, management and promotion of the sector that has been identified as among the key pillars to drive the realisation of Vision 2030 were on.

Among the expected changes is the formation of a Tourism Service, the Kenya Tourism Authority and the Tourism Finance Corporation. These institutions are expected to develop strategies to promote, regulate and mobilise funds for developing the sector.
“We plan to start drafting the regulations and rules and gazette them to operationalise the Act,” he said.

He called on the private sector to prepare for the new dawn by forging a united spirit in order to promote the growth of the sector instead of the several divisive associations representing different groupings.
“The private sector should have one powerful association to talk to the Government instead of the many associations,” he said.