The Hindu Business Line : Hike in taxes upsets Goa tourism sector

New regime
20 per cent VAT on liquor
Entertainment tax hiked to 50% from 30%
Cess imposed on foreign tourists
Withdrawal of off-season concession rates of luxury tax

Panaji , April 6

The hospitality industry in Goa is upset with the State's recently presented annual Budget 2006-07, which has proposed restructuring of luxury tax and entertainment tax including withdrawal of off-season concession rates of luxury tax and an overall increase in incidence of tax despite offer of some token concessions. The industry is also not too happy with cess imposed on foreign tourists.

The tourism industry has also expressed concern over increase in rate of the entertainment tax from 30 per cent to 50 per cent by introduction of composition tax for river/boat cruises.

The President of Travel and Tourism Association of Goa (TTAG), Mr Ralph de Souza, who also heads the Tourism Cell of the Goa Chamber of Commerce and Industry (GCCI), told Business Line that GTTA has already petitioned to the Chief Minister Mr Pratapsingh Rane about how concerned the tourism sector is over some of the features in the Budget that are bound to adversely affect the growth and development of the hotel industry.

Several issues

These issues fall under the area of VAT, luxury tax, and cess, and they have left the hoteliers in a state of shock, he added.

Under the new rates, off-season concession is taken away, which will hurt the tourism sector. Stating that the average rate of luxury tax would go up to eight per cent, the industry has not only sought lowering of the rates but also to make it chargeable on the room rate charged and not as per the printed rate. While welcoming the step to enhance the ceiling for composition tax under VAT from Rs 40 lakh to Rs 50 lakh turnover, TTAG has said that only stand-alone restaurants are entitled for this privilege. The industry has demanded that this be extended to the restaurants attached to any hotel, irrespective of star classification.

On imposition of 20 per cent VAT on liquor, GTTA has sought abolition of VAT and suggested that the Government increase the excise duty by 10 per cent on the current rate, and impose it at the first point.

On luxury tax, the industry has said The benefit that the hoteliers received was used in promotion of domestic tourism in summer and the rainy season. With the proposed increase of luxury tax, this advantage has not only been wiped out but the taxes imposed are higher than some other States, such as Gujarat, said GTTA.

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