Editor's Review

Aviation stakeholders have warned that air ticket prices will increase imminently if the government continues with its taxation policies in the sector.

While appearing before the National Assembly Finance Committee at KICC on Wednesday, November 28, explained that the increase would be occasioned by the imposition of 16 per cent VAT in the sector.

Some of the sectors being targeted with the imposition of the 16 per cent VAT include air ticketing, aircraft spare parts imported by aircraft operators and persons engaged in aircraft maintenance among others.

Therefore, the stakeholders called on the government to reconsider the increase in VAT charges.

File image of the National Treasury.

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“The cost of domestic and international travel within and outside Kenya will increase. The increase will also affect the operating costs and margins in the air travel sector," the Kenya Association of Travel Agents (KATA) warned.

On the other hand, KATA and other associations expressed that the tax policies would affect the tourism business in Kenya.

This is because park fees will increase significantly with the imposition of the 16 per cent VAT.

Consequently, the associations noted that Kenya could lose out as tourists look for other destinations that offer cheaper prices.

“By keeping all aircraft at VAT-exempt status, domestic travel will increase in volume and KRA will collect higher air passenger service charges, VAT on hotels, meals and accommodation services," the International Air Transport Association (IATA) added.

"The higher volume will increase KRA’s VAT earnings sustainably."