Defer tourism levy introduction: stakeholders

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Bereng Mpaki

THE government’s intention to impose a tourism levy from 1 July 2022 without proper ground work could compound the Covid-19 ravaged sector’s woes, stakeholders have warned.

The levy will be collected by the Lesotho Tourism Development Corporation (LTDC) on behalf of the government.

The government says collected revenue would be re- invested into development of tourism infrastructure around the country.

It will also be used to promote Lesotho as a destination of choice for both local and international visitors.

Starting from July 1, accommodation establishments will charge an additional five percent levy on their bookings; travel agents an extra M10 per ticket for the levy, while event organisers will charge an additional M5 per ticket.

Tourists who bring safari vehicles and motorbikes will be charged M20 and M10 respectively to enter the country.

According to the new regulations, those with leisure and speed boats will pay M20 upon entry while local and international adult tourists will pay an additional M10 and M20 respectively, on top of the fees payable to access tourism attraction sites.

Tour operators will pay a flat M1000 levy annually.

All players in the industry will have to register with the LTDC to facilitate the collection of the levy.

From the collections made from the tourism subsector players, the LTDC will establish a Tourism Development Fund. This will be used for development and maintenance of tourism products; private sector development; tourism destination marketing; and capacitating of frontliners.

However, tourism players are unconvinced about the move, saying it could back fire for their businesses.

They believe the levy could not have come at a worse time as the sector is currently struggling to recover from the slowdown in business brought on by the Covid-19 pandemic.

A levy-induced hike in charges would chase away customers and ruin their businesses.

Local hospitality establishments are among the worst hit by Covid-19 as they have operated intermittently since March 2020 when the government imposed the first national lockdown. Only businesses regarded as essential services were allowed to open during the lockdown.

When the lockdown restrictions were lifted, hotels were only allowed to operate partially for limited times. The restrictions were only lifted in January 2022 to allow full operation.

At the height of the pandemic in 2021, luxury hotel Mpilo Boutique was one of the high-profile casualties as it was forced to shut down due to economic pressures inflicted by the Covid-19 pandemic.

The classy hotel owned by business mogul-turned politician, Sam Matekane’s Matekane Group of Companies (MGC), is yet to reopen despite the lifting of the lockdown restrictions.

Some tourism businesses have retrenched workers and remain unoperational to date.

Bokang Kheekhe, an entrepreneur and organiser of the famous annual Maletsunyane Braai Festival, is not convinced by the “hushed approach” in which the government is introducing the levy.

Mr Kheekhe said there was a lot of groundwork that needed to have been done ahead of implementing the levy to cushion the industry.

He feels the levy must not be implemented immediately.

“This is obviously a very well appreciated effort by the government. However, I believe there is some critical groundwork that should have preceded the levy’s implementation.

“The government must first pour money into aggressive promotion of the country’s tourism attractions and events both locally and internationally in order to drum up demand, which was curtailed by Covid-19. Only when we are attracting a sizable number of international tourists into the country will we really see the levy idea coming to fruition,” Mr Kheekhe noted.

The implementation of the levy should be deferred for at least six months to facilitate a robust country marketing campaign to ensure collection of the anticipated revenue.

“The government should also consider delaying implementation of the levy for at six months to give itself an opportunity to embark on aggressive marketing and promotion of the Lesotho tourism products to stimulate demand.

“Again, when they finally implement it, I would like to see them introducing it incrementally by starting at starting at 2, 5 percent rate for accommodation facilities in the first year, and may be go up to five percent in the subsequent years,” Mr Kheekhe said.

Botleng Guest House managing director, Puleng McCarthy, also believes the high levy rates would kill the tourism sector.

“Why set the levy so high at five percent when other countries started at one percent? We are not against the imposition of the levy, but we are saying it should be planned in such a way that will not kill our businesses.

“We are effectively making it difficult for tourists to visit Lesotho by imposing the levy because some of us have pre-existing contracts with clients which we cannot just change,” Ms McCarthy said.

Morija Guest House manager, Bridget ‘Mapalesa Hall, questioned the government’s wisdom of targeting an ailing industry to raise funds for its spending.

“Most of us have performed miracles to keep our small businesses going during the Covid- 19 pandemic.

“I know the government needs money but why does it target an industry that has suffered most and is yet to recover from Covid-19? I find it strange that we are being targeted,” she quizzed.

‘Mamothe Mohapi, the managing director of the Ka Pitseng and Molengoane guest houses, argued that the levy would deter patrons from visiting their facilities.

“The levy will force us to pass on the costs to clients and this will scare them off. The charges are too steep, and I urge the government to reduce them,” Ms Mohapi said.

On his part, LDTC’s head of finance and administration, Thetso Thamae, said the stakeholders were consulted on the levy development around 2018.

Mr Thamae pointed out that the levy rates which the stakeholders were now questioning were part of what was agreed upon during the consultations.

He however, said there was never going to be a good time to intrude the levy if not now, adding that there was no going back on the introduction of the levy as the government needed money to finance its budget.

“The stakeholders raised some profound and pertinent concerns such as the levy being too steep especially for accommodation facilities,” Mr Thamae said.

“We will continue with preparations to implement the levy on 1 July 2022 as planned since the government needs money for its spending. However, we will recommend the downward revision of these levies taking into account the impact of Covid-19 which was not in the picture when the rates were discussed with stakeholders in 2018.”

He said that even if the levy had been much less there would still be opposition because some people were naturally averse to paying taxes.

LTDC’s Tourism Levy Coordination Officer, ‘Masalang Khasake, defended the imposition of the levy, saying it would be ploughed back to develop the tourism sector.

On her part, Member of Parliament under the Movement for Economic Change (MEC) ticket, Tšepang Tšita-Mosena said the levy would only serve to uplift the ailing the sector.

The National Assembly’s natural resources, tourism and land cluster portfolio committee had in 2021 advised for revision of some of the levy rates before implementation of the tourism levy.

It also found there was no requite M2, 3 million budget from the government to implement the levy during the 2021/22 financial year.

“I think this is an opportune time to introduce the levy as the country is on the verge of recovering from the Covid-19 pandemic. This will help to uplift the sector in the long run.

“Admittedly, it will be difficult for consumers to adjust to the new prices in the beginning, but eventually they will get used to it. Change is sometimes painful but it gets better with time. We should not think the tourism sector is being targeted with the levy, but is only meant to improve the industry for the better in the long run,” Ms Mosena noted.

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