After FM's refusal to revoke 5% service tax on rooms priced more than Rs 1,000, hotels and travel agents plan to turn down tourism honours if govt doesn't comply
After FM's refusal to revoke 5% service tax on rooms priced more than Rs 1,000, hotels and travel agents plan to turn down tourism honours if govt doesn't comply
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Hoteliers across Maharashtra plan to boycott any tourism awards they receive, if the government fails to withdraw the recent tax structure imposed on the hospitality industry by the Union Budget 2010-11.
In a convention held by the Hotel and Restaurant Association (Western India) at Lavasa on April 9, hoteliers across the state decided to boycott the awards after their attempts to convince Finance Minister Pranab Mukherjee to revoke the service tax of five per cent on hotel accommodation costing more than Rs 1,000 came to naught.
Recently, the HRA-WI President Kamlesh Barot had met the FM in Delhi to request him to withdraw the tax, citing that its introduction of such a tax would be a retrograde step and would repel foreign tourists from the country.
"I had made an appeal to the ministry to withdraw the tax which is going to take away tourists. However, the FM refused to do so. We might have to take this step if our demands are not met. We will speak to travel associations and take the decision accordingly," he said.
Suresh Talera, director, Talera Group of Hotels, who was part of the convention, said, "We have to boycott the awards for the travel and hotel industry. If the government itself is not worried about the inflow of tourists in the country, we cannot do much."
Apart from the service tax, the FM has also imposed an additional three per cent service tax on air-conditioned restaurants serving alcohol.
"We are already paying value-added tax on liquor. The extra burden of the service tax goes against our efforts to keep prices competitive in the international market. Instead of boosting tourism, these taxes are weighing down on the business," added Barot.
Travel agents too
Iqbal Mulla, treasurer of Travel Agents Association Of India (TAAI), feels that rejecting the accolades may help in making the government realise how much the industry contributes to the state's revenue.
"We will definitely support hoteliers. If you compare, the travel packages introduced by international agencies
are cheaper than those offered in the country, and by imposing such taxes, travelling to India will be impossible to afford."
He added, "Any tourist who comes to this country stays in a hotel and dines at a bar. But looking at
the escalating costs, foreigners will avoid travelling to India. The government should wake up before it is too late."
Official speaks
However, one department of the government observed that declining awards wouldn't really serve any real purpose. Avinash Dhakne, joint managing director, Maharashtra Tourism Department Corporation, also present for the discussion, has asked hoteliers to rethink their decision. "It makes no sense boycotting the awards. Instead, I request the hoteliers to approach the ministry again," he said.
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