GOVERNMENT has assured players in the tourism sector that suspension on Value Added Tax (VAT) on selected goods and services in the tourism industry will remain in place for the foreseeable future.
However, the industry must seek partnerships with local producers so as to reduce operating costs, Environment, Tourism and Hospitality Industry Minister, Nqobizitha Mangaliso Ndlovu, has said.
The minister has challenged tourism and hospitality industry to leverage on the revival of the local economy to acquire various inputs for the sector so as to reduce operating costs.
He said the Treasury was mindful of the challenges facing the sector hence the decision to ensure the sector continues to enjoy the VAT reprieve.
“We as the Government will continue with our VAT waiver system and I have agreed with Minister of Finance (Professor Mthuli Ncube) and he said for the foreseeable future it (waiver) will be there even up to 2023 and if need be, it will go beyond that,” said Minister Ndlovu.
He said the decision shows that the Government was committed to walking the talk and partnering with the sector.
The minister, however, pleaded with industry leaders to play their role by ensuring the tourism product was affordable to locals.
“Our plea is that let’s meet half-way,” said Minister Ndlovu.
The Government removed VAT payable on selected tourism goods and services in an effort to promote domestic tourism and help the industry back to life. The reprieve was announced by Finance Ministry early this year and was meant to run for 12 months.
Various players in the tourism industry had been calling for a discount or zero rating on VAT to be able to operate arguing that the domestic market was different from the traditional international market.
The ravaging Covid-19 pandemic forced hoteliers and tour operators to close leaving thousands jobless. Despite relaxation of lockdown restrictions and the industry showing signs of recovery, the Government feels the sector still needs time to find its feet hence will continue with the waiver.
Minister Ndlovu, however, is concerned about the cost of local tourism products and services and believes partnership between tourism industry players and local farmers, in particular, can reduce operating costs. He said there were a number of cost drivers that can be eliminated through partnerships.
This comes amid concerns that tourism players especially hotels get most of their supplies from outside the country, particularly South Africa.
Tourism is a key contributor to the country Gross Domestic Product and can drive Government’s vision for an upper middle-income economy through enhancing improved value addition in the National Development Strategy 1 (2021-2025).
“We need to continuously strive to be competitive because cost is a key determinant for competitiveness. Let’s be seen to be offering a better service at a lower cost to bring more people into Zimbabwe and certainly volumes will accelerate recovery,” said Minister Ndlovu.
“As a sustainable strategy in the medium to long term, we need identify cost drivers and knock them down. There are inputs into the hospitality industry like food, we have communities that live around industry and we have to see how many are contributing to the industry.
“If not, that means we are spending more importing inputs outside the country. These are the strategies that we need to say as a sector is it not worthwhile to sub-contract a local farmer to do tomatoes or onions and attach a well skilled Agritex officer to provide skills so that we also have quality products,” said Minister Ndlovu.
He said once input costs are reduced, tourism services and products will also be affordable to locals.