Egypt's governmental decision of imposing a 20 percent tariff on all equipment imported by tourist establishments, excluding automobiles, raised fears among investors, as the sector is still recovering from the political unrest that followed the 2011 January 25 Revolution.
"The decision will increase burdens on the sector. It will affect renovation and maintenance work in touristic establishments, which already suffer from lack of liquidity," said Elham Al-Zayat, head of Egypt's Federation of Tourism Chambers.
Al-Zayat highlighted that many touristic establishments have not done renovation and maintenance work since the global economic crisis in 2008, especially after prices of tourism and tourist numbers decreased.
The Federation does not object tariffs imposed on gambling tables, caviar or alcoholic drinks, as they are luxury goods. Yet, the equipment imported by the sector should be treated as production tools that should be exempted from customs tariffs, Al-Zayat added.
He assumed the sector could generate revenue double the sum of the $4.8 billion loan Egypt is seeking from the International Monetary Fund (IMF) if the government supports it.
2012 saw a 17 percent rise in tourist numbers to 11.5 percent and a 13 percent rise in tourism revenues. However, tourist numbers are 22 percent lower than 2010’s record of 14.7 million. They generate 25 percent less revenues.
President Mohamed Morsi issued on Sunday a decree raising customs tariffs on 100 'luxury goods', including shrimps, caviar and chewing gum.
The hike in custom tariffs is expected to generate around LE1 billion (roughly $150 million) in additional revenues annually, according to the head of the Egyptian customs authority.
Specifically, the decree raises tariffs from 5 percent to 40 percent on items, such as sunglasses, watches, nuts, boats and videogames in addition to the 20 percent tariff placed on all equipment imported by tourist establishments, excluding automobiles.