Coast hoteliers, businesses seek tax reprieve from counties

Hoteliers and business communities in Mombasa, Kwale and Kilifi have appealed to the county governments to abandon bed levies, reduce single business permit licence and the 2020 liquor license bills as their contribution to cushioning businesses due to the adverse Covid-19 pandemic.

Kenya Association of Hotelkeepers and Caterers Executive member Dr Sam Ikwaye expressed displeasure in the way the county government of Mombasa introduced a collection of bed levy from a select category of hotels within the county.

In 2020, just before Covid-19 stuck, the KAHC in collaboration with other stakeholders went came up with legislation that would ensure a broader revenue base for the county government, through the draft beach management bill.

The industry, however, suffered due to the disruption by the Coronavirus pandemic as the national government announced a raft of measures meant to contain the spread of the deadly virus.

As a result of the first lockdown in Mombasa, Kilifi, Kwale and Nairobi, the industry started experiencing a slump in tourism activities with low hotel occupancies, accumulated pending bills from service providers and unpaid staff. 

Dr Ikwaye noted that for the few operating hotels, the stringent conditions and the costs of operating under the new normal were too high.

“The matter worsened by the resurgence of the pandemic in the 2nd and 3rd wave which continued to worsen an already bad situation. Unfortunately, the county government is embarking on enforcing the contested bed levy at this juncture,” Dr Ikwaye said.

He asked the counties to be more sensitive to the prevailing business environment.

The business community is also asking  that the county recalls all demand notices for bed levies from hotels within the region, concentrate on the efficient administration of the Mombasa County Liquor Management Act- a good revenue to increase county revenues.

They also want the county to fast track the enactment of the Mombasa County Beach Management Act to institutionalize the Beach Management Fund which will offer convenience and proportionality to hospitality stakeholders to contribute.

In Kwale, the business community implored the admnistration to reintroduce tax waivers to cushion them from the coronavirus shocks as they had done in 2020.

The county, which heavily relies on tourism, has been hard hit with traders decrying lack of business. 

Kwale County Bar Owners Association Chairman Mr Richard Onsongo asked Governor Salim Mvurya to come up with a way of relieving the business community from the harsh times of Covid-19. 
“For us , we had the liquor licence levy reduced from Sh30, 000 to Sh10, 000 for bars. The county maintained the rate at Sh10, 000, which we used to pay to the national government before devolution.

Mr Onsongo added that for single business permits, the rate has not been increased.  

“We are only appealing for a two or three-month leave from paying taxes to the county government. We would like to get 60-90 days to at least stabilize as there is no business,” Mr Onsongo said.

Two weeks ago, the Mombasa High Court temporarily halted the Mombasa County government from effecting taxes, levies or penalties for the last year as a precondition for paying the current fees for the licence for 2021.

Justice John Onyiego issued the orders pending hearing and determination of an application by bar and restaurant owners in Mombasa who have challenged the current county Finance Act.
The court further directed the applicants to serve the county government with the suit papers upon which it is expected to file its response within seven days.

Mombasa County Bars, Hotels, Restaurants and Guest House Association says in its suit documents that the county government is coercing them to pay charges, levies, taxes and penalties for last year before being issued with operating licenses for 2021.

The association argues that the county government has ignored a fact that the National Government had ordered the closure of their businesses last year due to Covid-19 and they have not fully re-opened to date.

According to the petitioners, there was no public participation in the enactment of the Mombasa County Finance Act.