Poor performance of Ghana’s hospitality industry attributed to repeal of legislative instrument

Akua Dansua - Minister of Tourism

The Poor performance of the hotels and restaurants service sectors for the 2011 fiscal year could to some extent be attributed to the repeal of LI 1817, Ms Akua Dansua, Tourism Minister has said.

She said prior to the repeal of the LI 1817, the said LI, empowered the Ghana Investment Promotion Centre (GIPC) to grant incentives in the form of tax exemptions to operators in the hotel and hospitality industry.

According to her, such operators enjoyed tax exemptions on imported materials such as refrigerators, air conditioners, carpets, kitchen equipment, one vehicle (pick-up and delivery van) and linen among others, required for their establishment and smooth operations.

The Minister was responding to a question on the floor of Parliament on what had accounted for the poor performance of hotels and the restaurants service sector for the 2011 fiscal year as compared to the previous year.

Ms Dansua explained that the LI was to boost investment in the sector through construction, upgrading and refurbishment among others.

“Unfortunately, some beneficiaries abused the facility and used it to import luxury cars, furniture and other goods which they sold on the open market and avoided tax payment on them,” she said.

“Rt. Hon. Speaker, the abuse led to the repeal of LI 1817 in the 2011 fiscal year. Regrettably this slowed the pace of investment and affected the performance of the hotel and restaurant service sector,” she added.

The Minister said though newly registered hotels and restaurants projects recorded by the GIPC increased marginally from 24 in 2010 to 25 in 2011, the estimated value declined from $6 million to $5 million respectively.

Other reasons, she said, that could be attributed to the poor performance of the industry in 2011, was the keen competition and new business interest generated in other sectors of the economy particularly in the oil and gas and real estate sectors.

“The good news however is that the summary of revenue collected from the hotel and restaurant sector by the Ghana Revenue Authority for the 2011 fiscal year rose to GH¢18,599,133 compared to the 2010 figure of GH¢14,051,092. 18 representing more than 32 percent increase,” she added.

Ms Dansua said the expectation however is that this year would see better results in the hospitality sector because the review of incentives granted under the repealed LI 1817 has been completed and incorporated into the Internal Revenue Act.

She said government was also committed to reducing the sector’s corporate tax rate from 22 to 20 per cent.

By Eunice Menka

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