COVID Impact: Parliament Committee Calls for Operationalization of Tourism Development Levy

The Parliamentary Committee on Tourism, Trade and Industry has called for the operationalization of the Tourism Development levy and review of the existing taxes, fees and licenses so as to boost the stifled tourism sector.

The call was made on the floor of Parliament by the Committee Chairperson, Mwine Mpaka while presenting the committee report on lessons learnt from a Socio-Economic impact assessment of the COVlD-19 Pandemic on the Tourism, Trade and industry sectors so as to build resilience.

The committee recommended that the Minister of Finance, Planning and Economic Development urgently operationalizes the Tourism Development Levy that is already provided for in the Uganda Tourism Board Act Cap 333.

The Committee observed that unlike other states in the EAC region, Uganda lacks a sustainable tourism funding mechanism, noting that Kenya and Tanzania each introduced a tourism development levy to build a sustainable fund for their sector.

“lt is hoped that this will provide a sustainable source of funding for the tourism sector and we therefore propose a levy of 10 US$ to be charged on each ticket for every person who departs from Uganda by air transport,” Mwine noted.

Mwine noted that there should be a review of existing taxes, fees and licences in the tourism sector with a view to harmonize them.

He revealed that the Committee was informed that hotel owners were subjected to more than twenty-five charges comprising of taxes, licenses and levies, including; Corporation tax – 30%, Withholding tax – 6%, Value Added Tax (VAT)- 18%, Hotel tax – $2 per room per night, Local Service Tax – varies per hotel, Service Charge – 5%, Occupational Safety and Health – UGX 2 Million per star and Copyright tax for music – UGX 1 Million.

Others are Copyright tax for movies – UGX 1 Million, Property tax – varies, but more than UGX 200,000/=, Ground rent – between $5,000 – 10,000 depending on town and street, Per person night fees (national parks) – $5 to $30.

“All these numerous charges and more have always stifled the sector and this became worse during the pandemic outbreak,” Mwine noted.

Owing to the COVID-l9 pandemic, 8870 of tourism enterprises lost over 50% of their incomes, while 1 out of every 10 enterprises lost 100% of their incomes.

Furthermore, there was a decline in tourism revenue from US$ 1.6 billion to US$ 0.5 billions during the first lockdown, tax revenue from the Accommodation & Foods sector declined by 70.3%.

The House is set to debate the committee report next week and will give its verdict.