SPEED-Notes-2011-008 Tourism Levy
The CTA - Confederation of Business Associations of Mozambique, which works toward improving business environment in Mozambique on behalf of the private sector, identifies the tourism sector as a strategic and priority area for development. Maintaining a climate conducive to both foreign and domestic investments in the tourism sector is a priority for the organization not only because of the sector’s potential to generate foreign exchange, but more importantly, because of its potential to generate employment, increase consumption of local resources, contribute to alleviate poverty in Mozambique.
In November 2010, the CTA was requested by the Tourism Department to present its opinion on the proposed introduction of a 1% tourism levy.
According to the document, the purpose of the tariff is to generate revenue for financing the tourism sector in particular with respect to:
Strengthening the process of Promotion and Marketing of Tourism;
Training of Human Resources in the sector;
Support local communities in tourist areas, and
Support to Small and Medium Enterprises (SMEs).
While these goals appear to be relevant from the viewpoint of social development and sharing industry benefits with communities and SMEs, it can be an additional economic burden on operators. The fees can undermine the operators’ competitiveness and create anarchy in the sector if the tariff level is not competitive and/or the structures and systems of fee collection and management are not designed or are not suitable in the present industry context.
With the support of the USAID/SPEED project, we worked with CTA to prepare a Position Paper on the tourism fee. The paper highlights international best practices for optimal fee levels and present models for fee administration and management. The paper takes into consideration the characteristics of the Mozambican economy, particularly the type and stage of development of tourism operators, the tax burden on tourism and development level of infrastructure and tourist facilities in the country.