Entertainment and Event Fee – in Whose Interest? (allAfrica.com)

Bringing families together, strengthening bonds or simply taking time out to relax are just some of the benefits that hotels, restaurants, bars, cinemas, etc offer in the Federal Capital Territory (FCT). The blend of ethnicity within the FCT makes visiting these locations on any given day, a sort of social tourism the city offers. However, the question now is, will the implementation of the entertainment and event fee on these establishments, inadvertently make it less appealing for those who have indulged and are outside of our city’s elite?
The Federal Capital Territory Administration (FCTA) under the leadership of Senator Bala Mohammed had announced the implementation of the entertainment and event centre fees to augment its internally-generated revenue. The rationale behind this is to support infrastructure and other developments that the administration provides. Countries like India, UAE and Nevada in the USA have been able to boost their revenue through the introduction of variations of this levy. The fee would be imposed on any person who pays for the use or possession of any hotel facility or events centre, purchases consumable goods or services in any restaurant whether or not within a hotel in the FCT and any person who subscribes to any of the pay TV/networks and internet service providers, adding the rate of the fee imposed by the law shall be 5 per cent.
Why are these businesses important to the capital? For starters, restaurants are places of congregation and communication. Whilst it is a public place, it can provide a private meeting opportunity in which many people might feel more at ease, than at their home, when in certain company.
The FCT currently has over 300 restaurants, which range from bukka, fast food, fast casual dining, cafeteria, bistro or family style dining and café, to fine dining. Websites like Tripadvisor, which showcases hotels, restaurants and attractions from cities across the world, lists over 50 restaurants in the FCT and 350 hotels, all providing opportunities where the busy executive or the senior government official or even that middle income employee with a mortgage can get the same chairs, the same plates, the same food and ultimately the same relaxing experience.
Restaurants provide shelter and entertainment, and the offer of preparing “better” food without the hassles of cooking at home will continue to attract people.
“Every month, my husband and I make out time to visit a restaurant, have a good meal, and just talk to each other. Date night isn’t just for Americans, we both work, and have busy lives, so it’s the time we make out to just talk to each other” says Mrs Aboyomi.
David Oje explains that for him, “I take advantage of the swimming pool close to my office. The stress at work and the heat in the city is sometimes too much to bear. I’m not single, and I have family responsibilities, so I have to be careful with my recreational choices and still treat myself too. The hotel offers a good monthly rate for the use of just the pool and it suits me and my budget.”
Most of us can relate to the desire to make a quality and affordable hotel, our home away from home. At some point, we’ve experienced that sinking feeling as our stay comes to a close. Hotels are loved because we are pampered by the staff, and quality hotels, or those with even average customer service, make us feel like royalty. Some people associate hotels with some of the best experiences in their lives. They are part of those vacations we take to exotic places, and quite recently, part of our in city getaways that can suite our pockets and personal needs. Short of taking extraordinary measures and incurring extraordinary expense, the hotel experience can’t be replicated by staying at home.
In the FCT, there are currently a number of taxes, outside of the Entertainment and Event fee, which these firms are expected to pay monthly. These firms have learnt to plan and appropriately bill patrons for the use of their facility, with the only additions being the mandatory service charge and VAT. Though the sensitisation exercise is still ongoing, there are some who would rather not see it being implemented at all. In India, the entertainment tax is levied on every financial transaction that is related to entertainment such as movie tickets, major commercial shows and big private festivals. Other forms of entertainment that are included in the purview of entertainment taxes: Amusement parks, video games, arcades, exhibitions, celebrity stage shows and sports activities. This revenue is reserved primarily for the state governments. The tax rate varies per state and the aspect of entertainment is an intrinsic part of several transactions and services – this is done in such a way that the matter cannot be separated from the service or transaction itself. In the United Arab Emirates, hotel services and entertainment attract a 5% municipality tax i.e. rooms, food, other services.
In Nigeria, Merriment tax was introduced in Lagos State; from the Merriment Tax Law (1984) which makes provisions for imposition and collection of tax on merriments and other social parties in Lagos State and for purposes connected therewith. The law does not exclude any type of social parties or merriment, therefore, even the for a deceased one falls under this law. The law says the tax is for parties or ceremonies held either in a public place or private premises. The tax, considered unique when implemented, is also provided for in the Taxes and Levies (Approved list for collection) Act of 1988.
It is important to highlight these examples as the minister had explained that the entertainment fee was not novel to FCT alone, and the listed locations serve as case studies for how the implementation could be a revenue booster.
However, the policy has been generating serious concern in the city, with a number of people, particularly stakeholders in the industry calling for its cancellation. The stakeholders in the hospitality industry have described it as double taxation and an attempt by the FCT administration to stifle the industry.
In addition, with the continued economic uncertainties, and self imposed austerity measures by families, outside of external visitors, there are those who assert that the imposition of the tax would hinder the growth of the hospitality industry in the FCT.
In proffering this measure, the FCTA had expressed the recognition of the hospitality industry as a pillar of economic development in the territory, and the minister during the presentation of his statement had said that stakeholders have been informed that the introduction of the new policy was after due consultation with relevant stakeholders in the entertainment and events centre industry and was in line with global best practices, stressing the project was backed by relevant laws. He explained that the enactment of entertainment and events centre fee regulation 2014 is in pursuant to section 11, entertainment Act Cap 498 laws of the FCT, Nigeria 2007, and section 4 of the Federal Capital Territory Act, Cap F6 laws of the federation, 2004, which empowers the minister of the Federal Capital Territory to introduce the fee to boost Internally Generated Revenue for the purpose of development of the territory. The coverage of the policy, will include facilities such as night clubs, lounges, pay TV networks, Internet service providers, ISP, musical/comedy shows, motels, guest houses and short-let apartments, include restaurants, bars, cafes, joints and hotel facilities such as rooms, suites, halls and open spaces within the hotel premises.
In a response from the Federation of Tourism Association in Nigeria, Mr Tomi Akingbogun told LEADERSHIP Sunday shortly after the inauguration that the policy would cripple business activities in the hospitality industry, even as he described it as double taxation.
He argued that other developing nations were introducing tax reduction to encourage the growth of the industry, saying the association would come up with its official position on the matter soon.
Also, expressing his displeasure was the vice-president of the Hotel Owners Forum Association (HOFA) and chairman, Karibu Hotel, Dr Chike Ezeudeh, who said, “I stand to regret that we were not consulted and we shall react accordingly.”
He said some of them were hearing about the fee for the first time, stressing that the consuming power of an average Nigerian was driving down already due to dwindling revenue and the fall in the price of crude oil in the world market.
Ezeudeh said, “normally in a democracy it’s a two-way affairs- you consult the stakeholders. If you don’t consult the stakeholders and you just go and make a law that will be favourable to you… I think HOFA should have been consulted, we should have sat down together and discussed and hear our own side.
“Our next line of action is that we have to go through what they have written and look at it and then react accordingly. HOFA will make appeal to the minister and go through the proper channel,” Ezeudeh stated.
Whilst taking a tour of the city, things appear the same. Some managers of entertainment centres can’t comment on the effect of the 5% levy because they haven’t heard about it and no one has contacted them. Guests using the services who commented, were unanimous in explaining that, “things are expensive enough” why give them a reason to increase their prices? Mr Ezeudeh had lamented that the newly introduced fee might lead to retrenchment of staff in the industry as the dwindling economy was equally affecting the industry, stressing that there is a limit to what could be taxed on a customer. He said increased charges would drive customers away, pointing out that already the problems of multi taxation and electricity had driven away many investors to Ghana and other countries.