Levy catches sector by surprise
A NEW 10% “hospitality levy” to be introduced in KwaZulu-Natal from next year has caught many in the industry by surprise, amid a lack of clarity over how it will work.
DURBAN — A new 10% “hospitality levy” to be introduced in KwaZuluNatal from next year has caught many in the industry by surprise, amid a lack of clarity over how it will be effected and collected.
The levy is meant to help fund the province’s efforts to secure bids for hosting international events and conferences. It was announced by KwaZulu-Natal MEC for Economic Development and Tourism Mike Mabuyakhulu during his budget speech in the legislature on Friday.
However, he did not give details over how the levy would be calculated or collected. Consultations were still to take place with stakeholders, he said.
The levy is to be effective from April 1 next year, and is coming as the city of Durban is bidding for the 2022 Commonwealth Games.
“We will be shortly engaging the tourism think tanks and all industry players before the end of the month of September 2014,” he said.
The Democratic Alliance’s provincial spokeswoman on economic development, Ann McDonnell, said yesterday the proposal was a “big shock” that “caught us by surprise because this matter had not been discussed before.
“The MEC doesn’t say what is the thinking behind this levy and how it will be collected. Will it be collected by the local tourism authorities or by the provincial government?”
Mr Mabuyakhulu said the provincial government and its various municipalities were footing the bill for the bidding of large events yet private operators in the industry benefited from tourists’ spending.
KwaZulu-Natal had decided on the levy after studying cities like Glasgow, Vienna, Sydney, Barcelona, Singapore, Toronto and San Francisco which have funds to bid for and support large events.
“We are mainly funding our bid initiatives through allocations shared between the province and municipalities and, mostly, eThekwini municipality. However, based on our analysis of the abovementioned case studies, the publicprivate sector partnership applied in these destinations includes the establishment of a hospitality levy,” said Mr Mabuyakhulu.
In those countries, such a levy combined direct contributions by industry players as well as a service fee charged onto specified services.
KwaZulu-Natal Bed and Breakfast Association chairwoman Heather Hunter said the proposed levy “is a concern because we don’t know” what it entailed.
Federated Hospitality Association of SA East Coast region spokesman Charles Preece said: “It is difficult to comment now because we don’t know what this levy is all about. But the MEC said he will be meeting with stakeholders and we hope that he will be able to explain to us.”
eThekwini municipality economic development and tourism head Philip Sithole said the levy and bid fund were a good idea that would ensure win-win partnership between government and the private sector and for local destinations to be marketed well.