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Stakeholders protest planned 5% tax on hotels, others

By Olasunkanmi Akoni & Bolaji Williams
Hotel,event centre and restaurant operators yesterday rose vehemently against the planned introduction of five per cent tax on consumables in hotels, event centres and restaurants, describing it as double taxation.

Governor Babatunde Fashola of Lagos State had about three weeks ago signed into law a bill to impose a five per cent consumption tax on goods and services consumed in hotels, restaurants and event centres within the state with an assertion that the new law exempts all those who comply from paying the sales tax law.

The operators made their views known yesterday at the Stakeholders Conference on Hotel Occupancy and Restaurant Law, organised by the Lagos State Internal Revenue Service to sensitise stakeholders on the new law.

Speaking on behalf of the stakeholders, Mr Tola Onanuga, who represented Hotel Owners Association of Nigeria, described the tax as unprogressive as it was double taxation because they (hotel operators) were already paying Sales Tax and Value Added Tax (VAT) to the government.

His words: “The tax will lead to double taxation since we are already paying sales tax to the Federal Government on all goods sold.”

Onanuga added that the introduction of the tax would also lead to increase in prices of goods which would adversely affect patronage from members of the public.

He, therefore, appealed to the Lagos State Government to repeal hotel occupancy and restaurant consumption law which is expected to take effect by August 1, 2009, in the interest of the general public.

In his address, Fashola, who declared that the law would not lead to double taxation, explained that as soon as the new law takes effect, the identified sector would automatically be exempted from the pre-existing Lagos State Sales Tax.

His words: “It may be that goods and services in this sector cost a little bit more than they do in other states, but the benefits we offer for outweigh this difference and the additional resources which we are able to put together will enable progress far more rapidly.”

“We shall give due priority to the upgrade of infrastructure and security around hotel facilities and tourists sites. We expect that the attendant boost to economic activity in the tourism and leisure industry will also aid support services industry to greater profitability, attract even more visitors to Lagos State and generate even more employment opportunities.

“All we ask of the consumer is a contribution of N50 in every 1,000 spent, or N500 in every N10,000. In our View, these are not amounts that will create insurmountable problems for the consumer.

“But you would know that the potentials of this contribution are far reaching and extremely critical for our developmental purposes.”


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