Africa: Fears on Revenue Generation as Kenyan Cabinet considers Tourism Bailout

Bailout

The Kenyan Parliamentary Budget Office (PBO) has stated that the country will not generate significant revenues from its tourism resources this year even as the Cabinet begins to discuss a stimulus package for the sector.

In its analysis of the budget estimates for the 2020/21 year, PBO says the Tourism ministry will not meet its internal revenues (appropriations-in-aid) target of Sh3.8 billion due to the corona lockdowns.

In normal years, the cash would come from catering levies paid by hoteliers and restaurant owners. So far, about 90 percent of the sector businesses have shut as the country implements public health measures to curb the spread of Covid-19.

“This (tourism sector’s appropriation in Aid of budget) is unlikely to be achieved due to near collapse of the hotel industry…,” the budget unit says.

On Monday, Tourism Cabinet Secretary Najib Balala said the government was in talks with industry investors for bailouts to tame effects of the Covid-19 lockdown that threaten their bottom lines.

“There are some of the issues that we will have to address as the government,” Mr Balala said in a statement.

The package being discussed is in addition to the tax reliefs announced earlier by President Uhuru Kenyatta. They included reduction of value added tax and cuts on corporate and individual income taxes.

“We will need to come up with new strategies and innovations to help the sector if the lockdown persists because more than 1.6 million Kenyans could lose their jobs,” said Mr Balala.

According to the PBO, sports department, which is targeting to raise Sh14 billion internal revenues will also fall short as no activities, including, betting and lotteries which are the main source of its levies, are taking place.

Kenya, like other countries, suspended sporting activities and imposed travel restrictions in March in a bid to curb spread of the respiratory virus. The move in turn has led to record lows in tourist numbers with most hotels closing down while the gaming and betting industry is also grappling with a down-turn.

PBO— the unit that advises lawmakers on budgetary and financial matters is now calling for a downward review of the revenue targets amid un-certainty on when activities in the tourism and sports industries will resume.

The coronavirus pandemic-disruption on economic activities is set to hurt revenue collections by the taxman as individuals grapple with layoffs and salary cuts while businesses are facing drastic falls in income.

Source: Business Daily Africa

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