The Kanara Chamber of Commerce and Industry (KCCI) has asked the Karnataka government to reduce the tax on aviation turbine fuel (ATF) to one per cent in the State.

In a letter to the Karnataka Chief Minister, Basavaraja Bommai, the President of KCCI, Isaac Vas said, ATF is subsidized to as low as one per cent in the neighbouring State while it is as high as 28 per cent in Mangaluru making it unattractive for new airlines to come and start operations.

Referring to the recent letter by the Union Civil Aviation Minister to the States urging them to rationalise/reduce the VAT/sales tax on ATF to bring it on par with neighbouring States, he said the Minister emphasised the need to reduce the existing VAT/sales tax to 1-4 per cent at all airports.

‘Insignificant portion’

Quoting the letter, Vas said the revenue collected by the State government on account of VAT on ATF is an insignificant portion of the overall State finances, and this will be more than offset by the positive impact of air connectivity to the state through the flow of economic activities.

Stating that KCCI has been advocating to rationalise/reduce VAT on ATF for a long time, he said Mangaluru International Airport has been serving the people of coastal Karnataka, Malnad region and also parts of northern Kerala.

“With the opening of airports nearby, a lot of concessions have been given to different airlines in their respective States to start operating from those airports, thus ensuring more airline operations and maximum passenger traffic,” he said.