CCM Members of Parliament have faulted the government decision to impose Value Added Tax (VAT) on tourism services, saying the move will hinder the sector’s growth.

They also faulted the government decision to remove exemption on non-investment assets (shares listed at the Dar es Salaam Stock Exchange (DSE)), insisting that the measure proposed will indeed curtail the growth of the bourse.
The government proposed the removal of the exemption in its new budget presented by Minister for Finance and Planning Dr Philip Mpango last Wednesday.
Speaking on the aspect of tourism Members of Parliament said the decision to slap VAT on tourism would automatically put the country’s sector on the death row.
“We hail the government for its resolve to widen the tax base to increase revenue collection but I believe the decision to impose VAT on tourism services will strangle the sector that has been growing steadily,” said Sixtus Mapunda, MP for Mbinga Urban on CCM ticket.
According to Mapunda, the mistake that Tanzania wants to make in this new budget was made by Kenya in previous years but after learning the hard way the largest economy in East Africa removed it.
“Kenya had this kind of tax on tourism sector but it has removed it. Rwanda and South Africa also don’t have this tax. We better go back to our archives to find out why did we grant tax exemption in previous years and why are we imposing it now,” the MP added.
Jackline Msongozi (CCM-Special Seats) said Tanzania should not make such a mistake as it will negatively impact on the sector.
Hussein Bashe (CCM-Nzega) warned the government that if the decision is not overruled it would make Tanzania the most expensive tourist destination in the East African region. “Tourism is a competitive sector in the region and most probably in SADC zone. By upholding this measure the government is going to kill the industry,” he said.
Contributing on the aspect on tax imposed on shares, Bashe expressed his concern that the move will give neighboring countries, especially Kenya an upper hand in the business.
Prof Norman Sigalla (CCM-Makete) said: “The decision is unacceptable from all economic points of view. No country in EAC that has this kind of tax.”
On Sunday, Tanzania Stock Exchange Brokers Association (TSEBA) issued a statement saying the government announcement would have severe consequences on the stock market, hence inflicting heavy blow on the country’s economy.
The stock market dealers, who were in Dodoma seeking special audience with Dr Mpango, said if the government sticks to its gun on the decision, it will render investment climate uncompetitive.
According to the statement signed by TSEBA Chairman George Fumbuka and its secretary Raphael Masumbuko , the government should revisit the factors that forced it initiate tax exemption on the listed shares.
According to the statement, the decision to offer tax exemption was made as part of the measures to attract investments at DSE.