Tourism levy under spotlight
At conference under way at the coast focusing on tourism funding and levy regimes, while environment minister Pohamba Shifeta speaks of optimising the NTB's mandate.
The environment minister Pohamba Shifeta has proposed that the Receiver of Revenue should in the future, collect tourism levies in the country earn a 10% commission from this.
Shifeta was speaking during the opening of the workshop on tourism funding and levy regimes in southern Africa held in Swakopmund, where several SADC countries were represented.
He said that it is best to consider the option for newly created Namibia Revenue Agency (NAMRA) or the Receiver of Revenue, to collect levies as they have the full information and records of tourism enterprises.
According to him this money can then be deposited in a dedicated fund from which NAMRA can draw commission of about 10%, while the Namibia Tourism Board collects about 80% towards marketing and the remaining 10% may be used for training and skills development.
“This will free up NTB to focus on the core mandate of destination marketing by recruiting appropriately skilled human capital of which most is tied up in non-core services to collect levies, etc., which is not balanced and may be one of the barriers hampering the performance of the NTB. This is simply my wild proposal which may need more work by the NTB which is to benefit from this tourism tax,” said Shifeta.
According to Shifeta, the tourism levy in Namibia is meant for operational expenses and supplements destination marketing initiatives. In 2016/17 financial year an estimated N$36 million was collected in levy income.
He pointed out there that there are limitations as a result of fewer beds; limited enforceable levy payment mechanisms and under-declaration by operators, illegal operators and the arrival of Airbnb.
Airbnb, an online marketplace and hospitality service, enables people to lease or rent apartments, homes, hostels and hotel rooms without any operator's licence or adherence to the industry's standards and practices.
Shifeta said that the ministry is busy amending the enabling act of the Namibian Tourism Board Act and that these amendments will include empowering tourism inspectors as peace officers and empowering the inspectors to inspect the financial records of any operator with the tourism sector. Annual registration for all tourism-related businesses will also be implemented and tour guide regulations will be gazetted which will enable the registration of tour guides and certification.
“One of the arguments made in support of a tourism levy globally is that foreign tourists are able to enjoy a free ride to cultural attractions without bearing the same costs as UK and London taxpayers.”
He said a second argument is that tourists enjoy the benefits of many public goods such as parks, policing or elements of the transport network for which they also do not bear the full social costs. Thirdly, it may be argued that tourists impose costs on society such as pollution and congestion from the use of the transport network, which affect residents and other tourists.
“For these and other reasons, many European and global cities impose tourism taxes or levies, most of which are devolved to the relevant municipal authorities. Thus, tourism tax contemplated for Namibia is not a unique phenomenon, at all.”
Shifeta said when introducing a tax or levy of any form, due consideration needs to be given to the potential effects on the behaviour that may follow as a result.
According to him a tourism levy on hotel accommodation would be expected to increase prices and reduce demand; and as a consequence the destination might be perceived as overpriced by both domestic and internal travellers.
He said it is important to therefore consider how sensitive hotel demand, and visitor demand more generally, is to price changes.
“This is an area which is generally under-researched to give informed context how to apply the tourism tax or levy. The rate at which the levy is set will inevitably therefore be an important consideration. Also the governance arrangements for managing the income stream would therefore need careful consideration, with transparent arrangements in place to manage the disbursement of funds.”
He further gave a breakdown of how the tourism levy in countries such as Botswana, Zimbabwe, Zambia and Seychelles works.
ELLANIE SMIT
Shifeta was speaking during the opening of the workshop on tourism funding and levy regimes in southern Africa held in Swakopmund, where several SADC countries were represented.
He said that it is best to consider the option for newly created Namibia Revenue Agency (NAMRA) or the Receiver of Revenue, to collect levies as they have the full information and records of tourism enterprises.
According to him this money can then be deposited in a dedicated fund from which NAMRA can draw commission of about 10%, while the Namibia Tourism Board collects about 80% towards marketing and the remaining 10% may be used for training and skills development.
“This will free up NTB to focus on the core mandate of destination marketing by recruiting appropriately skilled human capital of which most is tied up in non-core services to collect levies, etc., which is not balanced and may be one of the barriers hampering the performance of the NTB. This is simply my wild proposal which may need more work by the NTB which is to benefit from this tourism tax,” said Shifeta.
According to Shifeta, the tourism levy in Namibia is meant for operational expenses and supplements destination marketing initiatives. In 2016/17 financial year an estimated N$36 million was collected in levy income.
He pointed out there that there are limitations as a result of fewer beds; limited enforceable levy payment mechanisms and under-declaration by operators, illegal operators and the arrival of Airbnb.
Airbnb, an online marketplace and hospitality service, enables people to lease or rent apartments, homes, hostels and hotel rooms without any operator's licence or adherence to the industry's standards and practices.
Shifeta said that the ministry is busy amending the enabling act of the Namibian Tourism Board Act and that these amendments will include empowering tourism inspectors as peace officers and empowering the inspectors to inspect the financial records of any operator with the tourism sector. Annual registration for all tourism-related businesses will also be implemented and tour guide regulations will be gazetted which will enable the registration of tour guides and certification.
“One of the arguments made in support of a tourism levy globally is that foreign tourists are able to enjoy a free ride to cultural attractions without bearing the same costs as UK and London taxpayers.”
He said a second argument is that tourists enjoy the benefits of many public goods such as parks, policing or elements of the transport network for which they also do not bear the full social costs. Thirdly, it may be argued that tourists impose costs on society such as pollution and congestion from the use of the transport network, which affect residents and other tourists.
“For these and other reasons, many European and global cities impose tourism taxes or levies, most of which are devolved to the relevant municipal authorities. Thus, tourism tax contemplated for Namibia is not a unique phenomenon, at all.”
Shifeta said when introducing a tax or levy of any form, due consideration needs to be given to the potential effects on the behaviour that may follow as a result.
According to him a tourism levy on hotel accommodation would be expected to increase prices and reduce demand; and as a consequence the destination might be perceived as overpriced by both domestic and internal travellers.
He said it is important to therefore consider how sensitive hotel demand, and visitor demand more generally, is to price changes.
“This is an area which is generally under-researched to give informed context how to apply the tourism tax or levy. The rate at which the levy is set will inevitably therefore be an important consideration. Also the governance arrangements for managing the income stream would therefore need careful consideration, with transparent arrangements in place to manage the disbursement of funds.”
He further gave a breakdown of how the tourism levy in countries such as Botswana, Zimbabwe, Zambia and Seychelles works.
ELLANIE SMIT
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