As Indian carriers protest the proposed hike in service tax on air travel, global airlines body IATA has said such taxes would compromise the industry's ability to maintain margins in the wake of rising fuel prices.
Rajji Rai, President, Travel Agents Association of India (TAAI) too has expressed his disappointment over the Union Budget. In a statement issued by TAAI, he said, “The reaction to the Union Budget 2011-12 has been one of disappointment. TAAI is of the opinion that the government is neglecting tourism and hospitality industries, amongst the largest generator of employment in the country. There are no incentives or sops from the Government for our trade. The current levels of taxation should not have been touched. Instead, the government has increased Service Tax on tickets and hotel rooms. This shows that the Government has taken no interest in Tourism and Civil Aviation in this Union Budget and is in fact totally insensitive about this industry in India. Air travellers in India are already paying Service Tax, airport tax etc and this expense is really bleeding the passengers. It is learnt that the Air Passengers Association of India (APAI) has decided to take up the matter with the International Civil Aviation Organisation (ICAO) as well as the civil aviation ministry. It is a well known fact that air travel is no longer restricted to the "Rich and the Famous" but has become the mode of transport for the middle income common man. Thus they are all going to be affected. Is there a service tax on other travel modes such as rail, road and water ? The answer is a NO then what is the need to tax air travel? It is really sad that our industry has once again been sidelined and not given the attention it deserves”.
In the last few weeks, additional taxes have been proposed on air travel in India, South Africa and Iceland, while new and increased taxes of 3-5 per cent of ticket prices were imposed in the UK, Germany and Austria last year, the International Air Transport Association (IATA) has said.
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