“LG authorities fleece hoteliers with 1% tax on turnover”

Local government authorities are discriminating against the tourism sector by demanding hotels to pay a 1% tax on turnover, whilst all other industries such as banks, hospitals, super markets and apparel sector only pay Rs. 6000 per annum.

This was disclosed by new President of the Tourist Hotels Association of Sri Lanka, (THASL) M. Shanthi Kumar at their 59th Annual General Meeting held at ITC Colombo. Minister of Foreign Affairs and Tourism Vijitha Herath, also participated.

These industries record much higher earnings than hotels. Hotels too must pay the same rate as all other industries. This has been a burning issue for the hotel industry for over 10 years and over 200 legal cases are pending.

The hotel sector investment in Sri Lanka is the highest in tourism, with over USD 15 billion. Over 70% of the entire tourism workforce is employed by hoteliers.

The highest contribution to the Government coffers are made by member hotels. It is by way of TDL payments, taxes, levies, license fee etc, while the treasury does not provide funds for development and promotion.

“Our members continue to spend over Rs 3 billion annually for overseas marketing and promotions. Further billions of rupees are spent to maintain hotel plants for continuous training of staff and for day to day operations.”

Tourism is a priority industry and is the second highest foreign exchange earner. Over 90% of the industry income is in foreign exchange bringing the highest net foreign exchange to the country, unlike some other industries such as apparel which pays back almost 50% of their revenue back to overseas suppliers of the raw material.

Tourism is a key foreign exchange earner; on the other hand, it has a very high multiplier effect flowing down to grass root levels. Unfortunately, these figures are not tracked as tourism revenue.

There is no doubt the industry has the potential to achieve USD 10 billion revenue in the coming years if strategically handled.

“So why is an industry with such high forex earnings being penalized and discriminated?” he asked.

He also disclosed that the country has not had a global tourism promotion campaign in place for the past 15 years while competing destinations such as the Maldives, Vietnam, Thailand, Malaysia are carrying out very effective campaigns in key source markets and we seek government support to get the campaign out immediately.

“There are over 18 ministries which are related to tourism activities and Ad hoc decision making by individuals or organizations can and have jeopardized the growth of tourism and to overcome this we wish to stress the importance of an Inter-Ministerial and Inter- Ministerial Secretaries committee headed by the President.

“This model was proven very effective in certain countries where tourism saw phenomenal growth.”

In order to achieve the targets planned in tourist arrivals for the future, the need to develop the Meetings, Exhibitions and Events Segment (MICE) becomes more important than ever before.

“We are presently only targeting small conferences as Sri Lanka does not have the capacity such as Dubai, Malaysia or Singapore and the country needs a 6,000 capacity venue within 30 minutes from the city of Colombo.”

He also recalled that THASL is the oldest tourism association and was set up even prior to the then Ceylon Tourist Board.

“I also take this opportunity to thank Dr.  Nandalal Weerasinghe, Governor Central Bank of Sri Lanka for taking the country forward with your forth right ways, during one of the most difficult periods in recent history.”

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