Tourist tax has already earned Cape Verde 85% of revenues for the entire year

According to a report from the Ministry of Finance on budget execution from January to July, revenues from the tourism tax amounted to CVE 405 million (US$3.6 million), equivalent to 85.3% of the budgeted by the government for the whole year 2022, which is CVE 475 million.

This tax had earned the state coffers in 2021 just over CVE 145 million, so the amount collected in the seven months of 2022 is also almost three times higher than the entire previous year.

This value represents “an exponential increase to the amount collected in the same period of 2021,” which “demonstrates the recovery of tourism activity,” reads the Ministry of Finance report.

The Cape Verdean government introduced the tourist contribution in May 2013, with all hotels and similar units required to charge CVE 220 for each overnight stay of up to ten days to each tourist over 16 years old.

The performance of this tax in the first seven months of 2022 still compares with only CVE 29 million collected in the same period of 2021.

Revenue from the fee compulsorily paid by tourists in Cape Verde fell by half from 2020 to 2021, renewing lows of CVE 145 million, according to an earlier report by the Ministry of Finance.

“Translating the fact that overnight stays in hotel establishments are still suffering a strong impact of the covid-19 crisis, with an extremely low level of tourist arrivals from abroad, despite signs of some recovery in the last quarter of the year, through the good performance in the vaccination rate for covid-19 and the consequent opening of the tourist-emitting markets, allowing some recovery in the collection of this tax,” the document reads.

That is a 51% drop from the CVE 296.6 million in 2020 – revenue essentially obtained in the first quarter – a year in which, from March to October, Cabo Verde suspended international air links to contain the transmission of covid-19, which resulted in a 70% drop in tourist demand.

In 2019, this tax secured an all-time high of CVE 992 million in revenue.

After recording a record 819,000 tourists in 2019, the sector, which guarantees 25% of Cape Verde’s Gross Domestic Product (GDP), saw the revenue from the Tourist Contribution drop by more than 60% in 2020.

According to a previously approved program, the Cape Verdean government plans to distribute more than CVE 2.2 billion from the Tourism Fund for works in the archipelago’s 22 municipalities from 2022 to 2026.

The measure is contained in a resolution of the Council of Ministers, published on February 14, which defines the programming of resources and priorities for fund investments “based on the forecast of revenue collection from the Tourist Contribution” for the period 2022 to 2026.

The revenues from this tax, managed by the Social Sustainability Fund for Tourism (FSST), are used to carry out rehabilitation works in municipalities to improve tourism attractiveness and promote the destination, professional training, environmental protection, and safety, among others.

The government resolution allocates funds from the fund to works in municipalities until 2026, for CVE 2.2 billion, with the municipality (and island) of Sal being the one that should receive most from the FSST, more than CVE 887 million from 2022 to 2026, also being the most touristic island of the archipelago.

With information from Lusa

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