Tanzania tour operators threaten to stop collecting government fees

Data from the Bank of Tanzania shows that tourism has staged a swift recovery in recent years, contributing $3.4 billion to foreign exchange earnings in the year ending December 2023, thanks in part to Tanzania – The Royal Tour documentary featuring President Samia Suluhu Hassan.

However, tour operators’ change of heart comes as a result of mounting frustration over what they perceive to be excessive service levy that is pegged by local authorities at 0.3 percent of their annual turnovers and which they claim substantially affects their profit margins.

The Tanzania Association of Tour Operators (Tato) has written a formal letter to Tanzania National Parks (Tanapa), Ngorongoro Conservation Area Authority (NCAA), and Tanzania Wildlife Management Authority (Tawa) communicating its members’ intention.

Reached for comment yesterday, Tanapa Conservation Commissioner Mussa Kuji said the letter has yet to reach him.

“Hopefully, I will receive it on Monday when I’m back in the office,” he said, noting, however, that it would be prudent if the matter was addressed by the Tanzania Revenue Authority (TRA)since all tax issues fall under its jurisdiction.

Tawa Conservation Commissioner Mabula Misungwi said he was away on a trip.

“I have been out of the office, so I cannot confirm whether the letter has been received or not,” he said.

NCAA Deputy Commissioner Vicky Shayo said the authority has not received any formal communication yet.

Details gathered by The Citizen show that the letter was also copied to the Permanent Secretary in the Ministry of Natural Resources and Tourism as well as the President’s Office (Regional Administration and Local Government).

Signed by Tato chief executive Sirili Akko, the letter said tour operators would with effect from July 1, 2024 cease collecting park entry and concession fees from tourists, citing the heavy burden of service levy as the overriding factor behind the move.

Tato also mentioned the arrest and locking up of some of its members by a special task force in Arusha over disputed service levy payment as another reason that prompted the decision.

“As you are aware, the current practice involves tour operators collecting concession fees, park fees and entry fees on behalf of the government. However, recent developments have highlighted the impact of these fees on Tato members’ turnover,” Tato’s says in part.

“As a result, Tato members have resolved that for a more efficient approach from 1st July 2024, Tanapa, NCAA and Tawa should directly collect the fees from the tourists themselves. By doing so, we can streamline the process and reduce the administrative burden on Tato members.”

Additionally, this change, Tato argues, will help mitigate the stress caused by district councils’ service levy demands based on total turnover.

“Also, the operators will no longer be subjected to the exchange rate fluctuations. It is also worth considering that the fees are in public domain, therefore tourists can pay directly.

“The dispute has brought the industry to a critical juncture, with tour operators openly expressing their concerns about the adverse impact of the service levy on their profit margins.”

Tato chairman Wilbard Chambulo said the association’s members were incensed by the action of authorities collecting service levy from them “at gunpoint”.

“This heavy-handed approach is severely damaging the long-standing trust and cooperation between tour operators and the government,” Mr Chambulo noted.

He further said that the coercive tactic is not only an affront to the industry’s integrity but also jeopardises the smooth functioning of tourism operations.

Mr Chambulo argued that by resorting to such aggressive methods, the authorities risk alienating the very partners who are vital in promoting and sustaining the country’s tourism industry.

“It is imperative for the government to reconsider its approach and engage in constructive dialogue with tour operators to find mutual, sustainable solutions that uphold the collaborative spirit essential for the prosperity of the industry and the nation as a whole.”

The owner of a tour company in Arusha, who asked not to be named, said, “The current local government service levy structure is placing an unsustainable strain on our operations. If the government does not address this issue, we will have no choice but to cease collecting entry fees on their behalf.”

The ultimatum has sparked widespread debate, with Tanapa, NCAA and Tawa officials as well as industry experts grappling to find a resolution that safeguards the interests of both parties.

Proponents of the service levy argue that they are essential for funding vital infrastructure and resources that support tourism and visitor amenities.

However, critics contend that the current system places an unfair financial burden on tour operators, stifling their capacity to invest in the growth and development of their businesses.

With tensions escalating, the looming prospect of tour operators ceasing to collect entry fees has triggered widespread concern about the potential repercussions for the tourism industry.

“This impasse threatens to destabilize the delicate balance between the government’s fiscal requirements and the viability of tour operators,” cautioned an industry analyst, Mr Daniel Mghwira.

“We are witnessing a standoff that could have far-reaching consequences for the entire tourism industry.”

As stakeholders on both sides of the debate grapple with the implications of this unprecedented standoff, the industry finds itself at crossfire.

“The stalemate underscores the delicate interplay between government policies and the businesses that sustain the Tanzania’s travel experiences” Mr Mghwira noted.

Amidst the heated discussions and high-stakes brinkmanship, the global tourism community holds its breath, awaiting a resolution that will determine the trajectory of one of the world’s most economically significant industries.

“The standoff between tour operators and governments underscores the profound impact of taxation policies on the fabric of the tourism industry, while laying bare the complex dynamics that underpin its sustenance and growth” Mr Mghwira added.