Finance Minister Mthuli Ncube scraps VAT on all Tourism products and services

THE Government has scrapped Value Added Tax (VAT) on the tourism industry as it moves to drum up support for the recently launched domestic tourism campaign meant to encourage locals to visit tourist attractions in the country.In doing away with the levy, the Government also unveiled the ZIMBHO promotion which is part of a raft of measures being implemented in reviving the tourism sector which was hard hit by effects of Covid-19. As the pandemic ravaged, tourism spaces were closed and it spelt doom for the industry that was highly reliant on foreign visitors.

At least 80 percent of Zimbabwe’s tourism activity, as noted by the Zimbabwe Tourism Authority (ZTA) is done by international tourists. The industry now pins hope on the local travel enthusiast. Fronted by the ZTA, the removal of VAT and the ZIMBHO campaign came at a time when the Government presented its master strategy of reviving tourism with the National Tourism Recovery and Growth Strategy.Hopes are high that if locals engage in travel and tour, the $5 billion tourism economy will be achieved in five years.

Speaking at the launch of the campaign on Thursday in Kariba, Environment, Climate, Tourism and Hospitality Industry Minister Nqobizitha Ndlovu said the initiative was meant to boost the economy through the tourism sector. For the initiative to yield results, he said the Government has exempted VAT on all tourism services for domestic tourists.

“To support this campaign, the Government has exempted VAT on all tourism services for domestic tourists in a bid to reduce the prices being charged on tourism products and services. Government will continue looking at ways to make tourism affordable to the nationals and expects to see such incentives actually translating to price reductions in the sector for the benefit of the domestic market. In removing the VAT the Government had hoped that there will be a corresponding reduction in the cost of hospitality Institutions.”

He said the campaign and other measures put in place will ensure growth in the sector.

“The broad campaign is aimed at encouraging the growth of tourism through participation of Zimbabweans. This comes at a time when His Excellency the President of the Republic of Zimbabwe Dr ED Mnangagwa launched the National Tourism Recovery and Growth Strategy in which we were challenged to achieve a $5 billion Tourism Economy by year 2025.”

Minister Ndlovu said domestic tourism was at the centre of the sector’s recovery.

“One of the key pillars of this Recovery and Growth Strategy is the promotion of Domestic Tourism,” he said.
The idea behind the campaign, according to the Minister, was copied from countries where domestic tourism has been a success.

“In the past, before the Covid-19 pandemic, destinations that were deemed successful the world over were supported heavily by their domestic market constituting more than 60 percent of business. While all destinations compete for International Tourism as it brings in new money into the economy, domestic tourism assists in inducing expenditure and circulating wealth in the economy.

“Furthermore, domestic tourists become destination ambassadors, assisting in promoting the destination and also encouraging international tourists who are usually keen to visit areas visited by locals. Domestic tourism further expands the value chain and helps in building national pride at the same time promoting national understanding among locals,” he said.

Minister Ndlovu said in the past domestic tourism has been on the low as most tourists are of foreign origin. The nation, he said, needed to rally behind the campaign so as to achieve set goals.

“In the past decades the tourism industry has been characterised by low participation of locals. Let me hasten to say that Domestic Business Tourism has been active as it constituted above 80 percent of tourism activity in Zimbabwe in all regions except Victoria Falls which was dominated by foreign tourists.”ZTA spokesperson Mr Godfrey Koti said the future of tourism was in domestic tourism.

“We continue to call upon our people to appreciate the beauty of our country. Let us travel and explore more. With the launch of the #Vakatsha ZIMBHO campaign, we see the industry picking up. It is a matter of restoring the sector and making sure citizens are ambassadors of the country’s tourism destinations,” said Mr Koti.

The Government invited the private sector to be part of the campaign according to Minister Ndlovu.

“As Government, we have opened up areas for tourism development to allow for product innovation and diversification in the form of cultural tourism, recreational areas and resort developments. Some of the areas earmarked for these developments include but are not limited to, Tugwi Mukosi, Kanyemba, Osborne Dam, Binga and Kariba. These are some of the initiatives that are being taken by the Government and require support from the private sector in implementation in order to grow our domestic tourism,” said Minister Ndlovu.

Minister Ndlovu said the campaign is the first step towards creating demand for the existing tourism products and services.The issue of pricing of tourism products remains a major issue that Minister Ndlovu said must be looked at.

“I remain totally concerned that the rates charged by the hotels and lodges in Zimbabwe are still very high. I urge the industry to take stock of what is happening elsewhere, particularly in neighbouring countries and review prices downwards. It is disturbing that an average breakfast costs US$25 or more in our hotels. That’s the price of a goat! Surely that cannot be justified regardless of even the much touted “high cost of doing business” argument. I urge the hospitality sector to focus on volumes rather than high margins,” fumed Minister Ndlovu.

A tourism business owner told Sunday News that the ZIMBHO campaign will only be a success if all the country’s destinations were well marketed.

“There is more that this country has for tourism. It is not only Victoria Falls. People must be presented with choices of places to visit. The better we tell stories of other places that are not popular, the more our people will be encouraged to travel,” said Mr Langton Masunda, a safari operator in the Gwayi Conservancy in Matabeleland North.

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