Industry Reacts to Proposed 2% Tourism Tax in Goa

The Goa Tourism Promotion, Management, and Regulation (GTPMR) Bill, 2024, has generated substantial debate within the tourism sector, particularly regarding the proposed ‘tourism development and sustainability’ fee. This additional 2% tax on every invoice has elicited strong reactions from stakeholders who argue that it could undermine the industry’s competitiveness and counter the benefits of the Goods and Services Tax (GST).

Stakeholder Concerns

The Travel and Tourism Association of Goa (TTAG) has expressed significant opposition to the new fee, describing it as “uncalled for” and urging the government to reconsider. “The tourism industry is already burdened with high taxes. Adding a 2% levy on every invoice will adversely affect our competitiveness and increase compliance burdens. No other major tourism destinations in India, like Kerala and Rajasthan, impose such a fee,” TTAG stated in a letter to the tourism department.

Also read: GOA PLUNGEGoa Tourism Promotion, Management and Regulation Bill, 2024, Government Invites Feedback

Industry insiders have echoed these sentiments, highlighting the multiplicity of taxes already faced by the sector. A hotelier, speaking to the Times of India (TOI), criticized the proposed fee as “ridiculous” and hastily introduced. “Goa’s tourism sector is already subject to GST, VAT on alcohol, trade tax, garbage tax, and now this new fee. In contrast, destinations like Thailand are reducing prices to attract tourists, while we are increasing taxes,” the hotelier remarked.

Former president of the Goa Chamber of Commerce and Industry (GCCI) and tourism veteran Ralph de Sousa emphasized that the new tax contradicts the purpose of GST. “Parallel taxes will not benefit the tourism industry. In today’s globally competitive market, such additional taxes are not feasible. Besides GST, we have local taxes that are extremely heavy, including garbage tax, professional tax, and other fees collected at the panchayat level,” de Sousa explained.

Economic Impact

A survey conducted by TTAG estimates that Goa’s tourism and hospitality industry contributes approximately Rs 2,500 crore annually in indirect taxes such as GST, VAT, and excise. Additionally, local bodies levy various fees, including waste management fees, trade taxes, and signboard taxes. Stakeholders argue that the introduction of a new tax would add to this already significant tax burden, potentially stifling the industry’s growth and attractiveness.

Government’s Rationale

The Goa Tourism Department, however, maintains that the ‘tourism development and sustainability’ fee is a necessary measure to promote sustainable tourism practices in the state. The revenue generated from this fee is intended to fund initiatives aimed at preserving Goa’s natural and cultural heritage, ensuring that the state remains a top destination for tourists.

As the debate over the GTPMR Bill continues, it is clear that a delicate balance must be struck between generating revenue for sustainable development and maintaining the competitiveness of Goa’s tourism sector. Stakeholder feedback will be crucial in shaping the final version of the Bill. The government is urged to consider the industry’s concerns and work collaboratively with stakeholders to develop a framework that supports both sustainability and economic growth.

(With Inputs from The Time of India)