Investor Presentaiton
FINANCING SUSTAINABLE TOURISM IN KHYBER PAKHTUNKHWA
1.2
Key Objectives and
Structure of the Note
The objective of this policy note is to give
a preliminary assessment of the viability
and challenges of ring-fencing revenue
generated in the tourist areas for developing
infrastructure and tourism related services in
those areas. This evaluation is done in the
context of the recent institutional changes
governing tourism in KP and the existing
revenue and expenditure systems of the
province. There have been significant changes
in the KP tourism administrative landscape
since 2018. The recently established KP Tourism
Authority under the KP Tourism Act 2019
envisions the creation of Integrated Tourism
Zones in the province². These zones would have
autonomy to frame regulations, provide single
window facilities for private sector investors
and use funds collected through various fees
and levies for tourism promotion and
development. At the same time the Khyber
Pakhtunkhwa Revenue Authority (KPRA) has
significantly reduced services tax on hospitality
and related services to provide an incentive for
private sector investments in the tourist areas.
The note therefore outlines the tax and tourism
governance structures in KP and reviews best
practices and experiences of both developed
and developing countries in tourism related
revenue generation and administration. The
review has been supplemented by input from
various stakeholders to contextualize and
understand the issues and problems in
instituting and directing local taxes towards
sustainable tourism management and
administration in KP. These stakeholders
include representatives of the private sector
related to the tourism and hospitality industry
in the province, public finance management
experts, relevant provincial government
departments including the KP Culture and
Tourism Authority, Galiyat Development
Authority, KP Revenue Authority, KP
Department of Excise and Taxation and
the Sustainable Tourism Development
Foundation.
The note is structured as follows: A rationale for
tourism taxes is given along with best practices
across countries followed by a detailed review
of the current structure of provincial and local
taxation and tourism in KP. Based on the
existing institutional structure, international
best practices and stakeholder review, issues
and challenges in ring-fencing revenue
generated in tourist areas are identified and
explored. Finally, the note highlights areas of
further research and puts forward some
preliminary recommendations for immediate,
medium and long-term action.
Tourism
governance
structure in KP
Introduction of
Tourism Act 2019
Establishment of
Integrated Tourism
Zones
Single Window
facilities for private
investors
Reduced service
tax on hospitality
2There are four ITZs proposed: Ghanool in Mansehra, Mankiyal in Swat, Madaklash in Chitral and Thandiyani in Abbottabad.
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