IATA, WTTC urge AU to rethink planned tourism tax regime in Nigeria, others

Posted: June 2, 2014 in travel & tourism

Plans by the African Union (AU) to implement a new tourism tax regime on air travellers and hotel guests in Nigeria and the rest of the member states have received thumbs-down from global travel and tourism groups.

In separate reactions to the move aimed at boosting revenue earnings for African countries who seek to exploit the huge potential of the sector to drive development and infrastructural growth, the World Travel & Tourism Council (WTTC) s well as the International Air Transport Association (IATA) urged the African Union to instead explore other avenues of benefitting from the sector.

According to the WTTC, the move by members of the African Union to implement a new tourism tax on air passengers and hotel guests in Africa could have a detrimental effect on the long-term economic growth and should be scrapped.

“Rather than taxing tourists, I would urge the African Union to focus on ridding itself of complicated visa processes, liberalising its skies, planning infrastructure for the long term and eliminating poaching. It is these measures, rather than taxation, which will ensure it gains a greater share of the global tourism market,” said President & Chief Executive Officer of WTTC Mr. David Scowsill.

Continuing, Scowsill said: “Travel & Tourism is a major pillar of the African economy which contributes to economic growth and job creation. The industry contributes 8.5 per cent of total GDP and accounts for almost 20 million jobs, or 7% of total employment. It should be protected and encouraged.

“Instead, the plans being discussed by members of the African Union to add a tax on air passengers and hotel guests will inevitably prove counter-productive to the economy of countries with a heavy reliance on Travel & Tourism, as has been proved in many other countries and regions around the world”.

On its part, the International Air Transport Association (IATA) urged the African Union (AU) to reject proposals for new taxes on air travellers and hotel guests, as it believed that if implemented, the taxes would threaten the livelihoods of millions of African citizens and negatively impact the economies of African nations.

“The proposed tax can be likened to killing the goose that lays the golden eggs. Eight million jobs in Africa depend on aviation, an industry that also delivers an US$80,5 billion contribution to the African economy. Aviation brings business, including tourism to the continent,” IATA said.

“And the same aircraft carry African goods to global markets. Making tourism and trade more costly may promise a narrow, short term gain for the AU treasury, but experience has shown that such taxes ultimately result in a vicious downward spiral ending in long-term pain across the economy,” said Tony Tyler, IATA’s Director General and Chief Executive Officer.

“Just look at the experience of Belgium, Ireland and Netherlands, to name only a few, that have tried to go down this road in the past and that have been forced to reverse themselves once they saw the impact of such taxes on their economies and societies.

“Globally more than 51 per cent of tourists arrive by air, a proportion that is even higher for Africa. Africa is already among the most expensive places for air travel and trade,” the IATA chief stressed.

Tyler further maintained that additional taxes will simply push visitors to alternative destinations. If demand falls, connectivity will be imperilled, with wider consequences for Africa’s economy.

“Instead of treating passengers as cash-cows, African Union governments should implement policies that encourage greater intra-African air connectivity, and facilitate the construction of world-class aviation infrastructure that will deliver sustainable economic and social benefits,” he continued.

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