Investor Presentaiton
FINANCING SUSTAINABLE TOURISM IN KHYBER PAKHTUNKHWA
The revenue and tax collection in the province is
done by KPRA and the Estate and Excise
Departments. Sales tax on services, property
tax and excise taxes are collected and
deposited in a central provincial fund managed
by the Finance Department. There is no
institutional mechanism which would allow
hypothecation or ring-fencing of tax revenue
collected from tourist areas for tourism
development. The only institutional
mechanism by which ring-fencing can be done
is through KPCTA and the Development
Authorities. As GDA is the oldest authority, it
can potentially serve as a model for KDA and
the upcoming Upper Swat Development
Authority. GDA collects property tax,
conservancy charges, water tax and toll tax -
this money is spent on tourism related projects
and infrastructural development in the Galliyat.
The GDA model, therefore, is the closest to ring-
fencing albeit without one critical ingredient -
formalised local community and stakeholder
participation in the decision-making process.
Therefore, given this context, the central
recommendations, and areas of further work in
order of priority are:
Streamline institutional structures to reduce
jurisdictional overlaps:
The first-best and perhaps the most
challenging recommendation to implement
would be to minimize overlaps of the various
tourism related departments and authorities
in KP; clear delineation of mandate and
jurisdiction of each department/authority and
simplifying regulations and tax liabilities for
tourism related businesses and investment.
At the same time, greater information,
cooperation, and coordination across depart-
ments is required to encourage private
investment and reduce roadblocks in the form
of unexpected regulations or approvals from
different departments. Also, jurisdictional
clarity and improved inter departmental
coordination will avoid multiplicity of taxes,
duplication of development programs,
multiple and redundant regulations, and
wastage of resources.
Therefore, an area of future work could be
a comprehensive mapping and review
of tourism and revenue related government
departments in KP to see where exactly
overlaps exist in administrative function and
regulations. Moreover, as the revenue and
expenditure jurisdiction of development
authorities, such as the Galiyat Development
Authority (GDA), is extensive and covers
the main tourist areas of KP, a thorough
assessment of their performance, capacity and
capability of using locally generated revenues
for infrastructure development and service
delivery needs to be undertaken.
Institutionalise stakeholder input in
development authorities:
In the absence of local body/government
jurisdiction on tourism and with multiplicity
of government departments in the tourism
domain, a second-best solution is to insti-
tutionalize stakeholder and community voice
into the structure of the tourism and develop-
ment authorities. This would ensure that the
decision of spending locally collected revenues
by the respective authorities is reflective of the
preferences of the local stakeholders and is
thus less ad-hoc. It will also create stakes for the
private sector and the local community in the
authority, increasing willingness to pay taxes
and fees etc. for specific projects and services
related to tourism. For that, it is recommended
that development authorities such as GDA
have formal working committees of the Board,
with private sector stakeholder participation to
prioritize tourism related infrastructure and
service delivery projects.
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