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Industry Associations unhappy with Union Budget 2011-12
By TBM Staff | Mumbai

The reaction of industry associations has been one of disappointment to the Union Budget 2011-12. Associations feel that the government is neglecting tourism and hospitality industries, which are believed to be among the largest generator of employment in the country. Below are the reactions of office bearers of various major travel and hospitality associations.

Ajay Prakash, President, TAFI
It's unfortunate that air travel has again been targeted. The aviation industry has come out of a slump without any incentives or sops from the government, unlike some other industries which clamoured for bailouts during the global financial meltdown. The Finance Minister should have left the current levels of taxation untouched, if he could not reduce them. What he should have looked at instead should have been to rationalisation of Service Tax collection mechanism and to ensure that all Service Tax pertaining to an air ticket is collected only on the ticket, thereby avoiding dual taxation of tickets purchased through a travel agent.

Rajji Rai, President, TAAI
Government has shown no interest in Tourism and Civil Aviation industry in this Union Budget. Instead, government has increased Service Tax on tickets and hotel rooms. I do not understand why the government is neglecting the travel and tourism industry although the industry is the largest employment generator. Hence, I believe the government is totally insensitive about travel and tourism industry in India.

Subhash Verma, Vice President, ADTOI
It is unfortunate and a bad move on part of the government to increase Service Tax on Economy Class tickets for domestic and international flights and higher class air tickets on domestic sector. I believe no other country has such tax practices. Air travellers in India pay a bunch of taxes such as Service Tax, airport tax and User Development Fee etc and this practice is really bleeding customers and making air travel very expensive.

Nakul Anand, President, Hotel Association of India
It is a growth oriented budget focused on maintaining and boosting GDP growth that has been set at 8.75 to 9.25 per cent. It has many positive aspects like more disposable income has been placed in the hands of the common man and this will stimulate demand.
The hotel industry is however disappointed that its longstanding demand of being accorded the status of an Infrastructure Industry has not been met. Service Tax levied on hotel accommodation and restaurants in certain categories will impact tourism but it is hoped that the introduction of Goods & Services Tax will address this. All in all, the Union Budget sets an economic environment which is conducive for growth in the country. Tourism growth is directly linked with the growth in the economy, the consumption driven Budget therefore, augurs well for the hotel industry.

Biji Eapen, National President, IAAI
Air travel is no longer restricted to the affluent class and has become handy mode of transport even for common man. Government of India has projected an explosive growth in terms of domestic traffic. Today India is placed at fourth position in terms of largest domestic passenger volumes and is targeting the third place by 2020. At this juncture, tax incidence of the kind envisaged in the Union Budget 2011-12 would be counter productive, defeating the very goals targeted by the same government.
It is learnt that Air Passenger Associations have already downplayed the proposals. Other travel means such as rail, road and water are outside the purview of Service Tax. Hence they content that tax incidence on air travel alone is discriminative and thus unacceptable. On the one hand, Airport Tax itself burdens passengers. Capping it with increased Service Tax makes it heavier still. Spiraling fuel costs (ATF) is an evil that the industry has to live with which together with swelling tax demands pushes air travel to prohibitive levels for the ordinary and the genuine. The concept of LCC (low cost carriers) offering affordable ticket costs is some indication of the scenario that should prompt our government authorities to prioritise cost reduction modalities in Air Traffic. Budget proposals of Service Tax hike evidently dampen the fire-power of the travel industry.

Vijay Thakur, President, IATO
I am very disappointed with the Union Budget 2011-12. No good financial packages have been outlined in the Budget 2011. Instead government has increased Service Tax on essential components of tourism such as air tickets and rooms.

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