The Hindu : New Delhi News : Luxury tax driving tourists away from Capital

Online edition of India's National Newspaper
Wednesday, Sep 22, 2004

New Delhi

New Delhi

Luxury tax driving tourists away from Capital

By Our Staff Reporter

NEW DELHI, SEPT 21. The night shopping concept was introduced by the Sheila Dikshit Government not only to woo Delhiites away from the shopping malls in the adjoining townships but also to provide an opportunity to the visiting foreign tourists to get a taste of Delhi's night life as well as have an enjoyable and comfortable shopping experience.

However, this is unlikely to happen as the imposition of luxury tax on actual room rents is driving foreign tourists away from Delhi if not India.

The hotel industry or the travel agents could have hardly bargained for such an inauspicious start to the "tourist season" beginning this month-end.

The hotel and travel industry is already feeling the pinch as the new tax regime has driven away foreign tourists who are now looking at other alternative tourist destinations in Asian countries.

The new regime also threatens to isolate Delhi compared to other tourist destinations in the country as travel agents and foreign tourists now plan to just bypass the Capital. Not only will the Delhi Government lose out badly on revenue, but it will also create problems for the hotel and travel industry, which is already facing flak from foreign guests who are refusing to pay the extra money on account of the new tax regime.

Says the General Manager of Le Meridien, Tarun Thukral: "The foreign guests are very upset. They are unable to understand the new system and are leaving in a very frustrated state. Neither the Government nor the hotel industry will gain from this new tax system. It is killing the hotel and travel industry in Delhi and could have wider ramifications."

The worst hit are the tour operators who are suffering on account of this new regime. It is common knowledge that people plan their holidays months in advance and all the bookings are made accordingly.

Now that the new regime of charging tax on printed rate has been made effective from September, the room charges and other inventories have gone up.

The foreign tourists just refuse to pay up this extra amount and the hotels or the travel agencies are being asked to absorb this additional charge that could have a telling affect on their profits as well as operations.

However, the Delhi Government has its own arguments and terms the whole propaganda against the new tax regime as misleading.

According to the Finance Minister, A.K. Walia, this step had been taken after the collections dipped from Rs. 129 crores to Rs. 89 crores during the past two years.

"This happened despite the promise by the industry that they would ensure enhanced revenue. Such a regime had been in place three years ago and the Act was amended at the pleading of the hotel and travel industry. However, despite a boom in business and tourist arrivals, they failed to live up to their word."

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