Oberoi MD flays travel, tourism tax policies

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Oberoi MD flays travel, tourism tax policies

KOLKATA- The combined effect of the various taxes imposed by the Centre and the State Governments on dollar-paying tourists arriving in India can only be described as "extortionate", says Mr P.R.S. Oberoi, Vice-Chairman and Managing Director of the Oberoi Group.

Reviewing the key issues concerning the domestic travel and tourism sector in EIH Ltd's annual report for 2000- 2001, Mr Oberoi has pointed out that the Central expenditure tax of 10 per cent along with the luxury taxes imposed by States, applicable on payments made by visitors in foreign currencies, virtually amounted to a tax on exports, which was somewhat "illogical".

Some States, according to him, levy very high rates of luxury taxes (Tamil Nadu levies a rate of 25 per cent on the published room tariff), and added to this are the exorbitant State sales taxes payable on food and beverages (Karnataka levies a sales tax of 63 per cent on imported liquor) and other levies such as inland travel tax as applicable to domestic air travel, airport taxes and service taxes on hired motor vehicles etc. Besides these, there are taxes on air tickets, coach transfers and airport taxes, as well as the recently hiked monument fees.

The World Travel and Tourism Council, in its tax barometer (which compares taxation rates applicable to tourists in destinations worldwide), has listed Delhi and Mumbai amongst the most taxed cities in the world for international travellers. According to Mr Oberoi, taxes in the Asian region varied between 3 per cent and 7 per cent, and it was hardly surprising that India, now labelled as a high-tax destination with a "confusing and complex array of levies", leaves the visitor irritated and bewildered, if not "feeling cheated".

Queried by Business Line on this issue of State levies on food and beverages, Mr S.S. Mukherjee, Deputy Managing Director, said: "Such tax levels are driving away the foreign tourists to other destinations in the region".

He said the sales tax levied by the State Government on imported liquor served at the bars in Oberoi Grand was as high as 60 per cent, and if the same is consumed at the in-house discotheque, the rate was a whopping 90 per cent.

Describing "convenience" as an important factor which guides the international traveller, Mr Oberoi pointed out that despite the industry's frequent suggestions, the Government has still not thought it fit to introduce a 'visas on arrival' policy, followed by many countries in the region and around the world.

Debunking the so-called obstacles, he said: "If other countries can harmonise the needs of both security and tourism, is it beyond our capability to do so?" He also urged the Airports Authority of India to take immediate steps to make improvements at the country's important airport terminals.

Faulting the travel and tourism sector for not joining hands and effectively representing the tax and other critical issues to the Central and State Governments, Mr Oberoi has urged all stakeholders - hoteliers, travel agents, tour operators and airlines - to join in a unitary Confederation of Associations and aim at what Nasscom has done for the information technology sector.

The main deterrents to growth of the tourism sector, besides the multiple taxes, he pointed out, were poor airports, inadequate infrastructure and inadequate seat capacity on international routes and within the country.

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