Durban - Tourism industry players in KZN on Thursday condemned the 10 percent levy proposed by MEC Mike Mabuyakhulu as a rip-off that could force some businesses to close shop.
The Economic Development and Tourism MEC was addressing industry representatives on the levy for the first time.
Mabuyakhulu first announced the levy, but provided little other detail, during his budget speech earlier this month.
He said a support fund was needed to finance the marketing initiatives aimed at promoting tourism in the province to the international arena.
At Durban’s ICC on Thursday, the MEC was questioned on whether the levy’s impact on industry had been assessed.
Donovan Muirhead, chairman of the National Accommodation Association of South Africa, said the cost of doing business in the industry was “horrendous”.
“Take into consideration the registration for a six-bedroom guest house, liquor licensing, rates, electricity, suppliers and insurance, to mention a few.
“Small guest houses make about 10 percent average profit on an annual turnover and we are already contributing 1 percent to Tourism Marking South Africa, and to add another 10 percent will definitely kill the industry, and people will lose jobs,” said Muirhead.
Mabuyakhulu told those at on Thursday’s business breakfast that the department had done global analyses on the levy idea.
“Places such as Bangkok, Singapore, Budapest, Vancouver and many others have this fund. With the fund in place, we will be able to target events that will generate a strong return on investment.
“We will set up a committee made up of all role players to discuss all the nitty-grittys of the plan.”
He promised transparency and accountability and that money would be used for programmes agreed upon by all role players.
The committee will have until November to come up with recommendations and implementation.
Akash Singh, chairman of the Durban Chamber of Commerce and Industry, said they were not against the levy, but felt that 10 percent was too much.
It was not clear whether the 10 percent referred to turnover or net profit.
“The committee must find a mechanism that will work well for the business. We need to talk some more about the idea because if it is implemented in its current form, the bottom line of the business will hit hard.
“Guest houses make about R60 000 to R80 000 annual turnover.
“There are operational costs to worry about and this 10 percent will be additional stress,” said Singh.