Experts seek tax incentives for tourism sector
By Benard Sanga and philip Mwakio
| June 10th 2015
Players in the tourism sector have suggested an elaborate recovery strategy that includes a three-year tax break to enable the sector bounce back and stop the loss of more jobs.
They are now appealing to the National Treasury Cabinet Secretary Henry Rotich to use the 2015/2016 budget statement to cushion the ailing sector and spell out a recovery strategy.
The stakeholders and players are also asking the national government and counties to establish tourism protection services and training of the National Youth Service (NYS) to offer tourism services, especially along the Coast beaches.
They also criticise the government for failure to appoint members to tourism boards since the enactment of the new Tourism Act 2012 saying this has affected communication between the sector and the Government.
Despite robust proposals by county governments and the national government, many experts do no expect a quick recovery of the industry until after the 2017 General Election citing lingering insecurity.
At the moment, 23 star-rated hotels remain shut in coast for lack of business and security challenges that have been compounded by recent terrorist attacks in the region. This sparked Western travel advisories and evacuation of foreign visitors early last year.
According to Diani Beach Resort & Spa General Manager Titus Kangangi, domestic tourism and tourists from the region is what is keeping the surviving hotels afloat.
Kenya Association of Hotelkeepers and Caterer (KAHC), Coast branch, Executive Officer Sam Ikwaye says in the short term, Kenya should reduce its marketing expenditure in the UK and traditional markets affected by Western travel advisories.
He says that the Government should channel more funds to markets that have not advised their citizens against travelling to Kenya.
The National Assembly has cut allocation to the ailing industry from the Sh7.1 billion in the 2014/2015 financial year to Sh6.8 billion in the 2015/2016 budget estimates. The hospitality industry has over the years demanded 10 per cent of the industry's earnings.
"Italian and Germany markets remain resilient and France is very supportive that is where we should concentrate until 2018," says Ikwaye.
Despite the drop in tourist traffic since 2012, hoteliers in Mombasa say they have continued to shoulders heavy taxation and are rooting for a three-year tax break.
Hoteliers are charged a bed levy at two per cent, a service charge of five per cent, 16 per cent Value Added Tax (VAT) in addition to the end year profit tax of 30 per cent. County governments in Coast are also angling to introduce a bed levy of their own.
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