Multiple taxation, epileptic power supply affecting hospitality industry – Operators

February 28, 2024 Mary

The operators of hotel businesses in Enugu State have said that multiple taxation imposed by the state government and epileptic power supply is crippling their businesses in the state.

They noted that doing hotel business in the state was no longer fruitful as it used to be, due to terrible economic challenges in the industry.

Some of the operators who spoke with the News Agency of Nigeria (NAN) in separate interviews listed their challenges to include multiple taxation, scarcity of water, insecurity and power outages.

An operator, Edwin Madugba, said hotels could not do without power, adding that most of them ran their generators whole day and beyond to supply light to their guests.

According to him, when there is no power supply, they will be subjected to use of diesel which they currently buy N1,300 per litre.

“What volume of sales will one make to recoup and a lot of hotels now rations hours of giving light,” he said.

On state taxes, Madugba listed the levies on hotels to include Demand notices from Enugu State Waste Management Agency (ESWAMA), taxes from Enugu North Council Area, Ministry of Health, Enugu State Internal Revenue Services (ESIRS) and others.

“Sometimes they are asking hotels to pay between N500,000 and N1 million under this hard and harsh economy,” he said.

He added that they paid much on security which exposed them to loss of revenue.

“Under normal situation, we are not supposed to hire armed men to guard hotels.

Madugba appealed to governments to reduce taxes charged to them and put other infrastructure in place.

Another operator, who pleaded anonymity, told NAN that in spite of Gov. Peter Mbah’s effort in fighting insecurity in the state, many people hardly come to the South East to host ceremonies like weddings and conferences.

He explained that before now, people used to rush to Enugu from Lagos, Abuja and other places because it was a peaceful state, regretting that they hardly come for fear of insecurity.

He added that the government should be thanking people in the private sector for providing employment but instead it over burdened them with taxes.

“Apart from normal tax we know, there are some other kind of foreign taxes they imposed on us.

“Take for instance, purchase tax they introduced and up till now they are still trying to explain it to us what it is. We have not heard of it until this government came into power. Purchase tax is new to us. These taxes are killing hotel businesses in Enugu.

“They should be encouraging us as it is difficult to run hotel businesses in Enugu, rather, the government discourages us,” he lamented.

He stressed that the issue of water was worse than tax as a full tanker of water was about N40,000.

“In a week, if your occupants are 50, you will need like over 10 tankers for them to use your facilities.

When contacted on the matter, the Chairman, Tourism Practitioner of Nigeria (STPN), Enugu Chapter, Amos Ogbu, declined comment.

Responding to the issue of tax, the Executive Chairman, ESIRS, Emmanuel Nnamani, said there were no multiple taxes in the hotel industry.

He said that what they were implementing in the hotels were purchase tax which was Enugu State version of consumption tax.

He explained that the tax was imposed on certain goods and services which included all services rendered by hotels, be it accommodation, lodging or drinks and they were aware of it.

The chairman said the tax had been in the state law since 2004 but was introduced in Oct. 2023 which was being implemented.

“Because it covers hotel activities, it is not the hotel that pays but the customers.

For instance, if the hotel bill is N50, 000, we ask that customers pay five per cent; what the hotel is expected to do is to charge customer N52,500.

“They will remit N2,500 to Enugu State, so they are not paying from their purse.

“The Pay As You Earn (PAYE) is not the hotel that pays it but its staff. Their job is to deduct and pay to state government while Value Added Tax (VAT) to the federal government is not paid by hotels but customers.

“Aside from the purchase tax, hotels pay profit tax, which they paid to the federal government and the sanitation because they generate waste which is being managed by the state government.

Others are business premises renewal and water bill,” he said.

On the scarcity of water, the State Commissioner for Water Resources, Dr Felix Nnamani, said the state had over 120 million litres of water to distribute to Enugu people.

Nnamani said the delay was due to the ongoing maintenance on the water reticulation lines as the government changed old pipes, adding that the government had cleaned up and refurbished old reservoirs.

He said there was a partnership between the state ministries of Water Resources and Works.

“As they do the roads, we dig our holes and lay our pipes and that is causing the delay.

“It will be wrong after putting asphalt on the road, you will start cutting it in order to lay pipes. So we don’t want that to arise considering the economic situation we found ourselves globally,” he said.