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Tourist tax levy looms, hoteliers’ air frustration

Tourist tax levy looms, hoteliers’ air frustration

The rebranded Tourism Ethiopia is set to establish a tourism fund, an institution financed from various sources including an upcoming tourist tax system.

Lensa Mekonnen, CEO of Tourism Ethiopia, told The Reporter that once the idea of collecting tax levies from tourists is welcomed by industry operators, the next step will be studying and benchmarking mechanisms: either to adopt a percentage or a flat rate taxation systems.

The central idea of establishing a tourism fund as an institution stems from the lack of financial instrument Tourism Ethiopia is longing to have as it markets Ethiopia in the global tourism and hospitality industry. In addition, Tourism Ethiopia is tasked to develop and nurture destinations in Ethiopia and for that, it has to look for more sources of financing, Lensa said.

Meeting with star-rated hotel owners and managers on Thursday, Lensa and, Lemlem Kassa, director of legal department with Tourism Ethiopia, briefed the gathering about the ongoing revisions and amendments regarding the institutional structure of the new tourism fund. Some of the things which are still being mulled over include the ‘how,’ the ‘When’ and the ‘what’ of the new tourist tax, which is to be levied on every tourist visiting the country. However, this was met with frustrated hoteliers. To begin with, many have suggested that although they approve of the idea, they urged it should be further refined and well assessed.

Equally, many hoteliers located in regional areas have voiced their frustration over the impacts of the political situation and uncertainties it has created, severely challenging hospitality and tourism businesses. Many are losing a lot every day and could not repay bank credits or pay wages and salaries.

The pertinent challenges voiced by hotel operators include the lack of affordable access to finance, market distribution, political disorder and instability.

Lensa stressed on the seriousness of the problems and pledged to forward the concerns and converse with higher level officials.

However, some still challenged the tax levy fearing it would be discouraging to the already expensive rates of accommodations in Ethiopia as compared to its peers urging Lensa to seriously consider the likely impact of the measure.

The restructured Tourism Ethiopia will have a new board of directors with a three year term and is parallel to the Ministry of Culture and Tourism, reporting directly to the Office of the Prime Minister. Some hoteliers questioned this structure and Lensa responded by saying that the assignment of Tourism Ethiopia will solely focus on business and corporate operations in the sector and will leave regulatory and policy orientations to the ministry.