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Goa mulls hike in tax on liquor, domestic tourists to tide over finance crunch

Sandesh Prabhudesai in Panaji

Will the Goa government target the liquor industry and domestic tourists to raise its own resources? That is the question puzzling the local tourism industry.

The proposal was made by the Planning Commission to overcome the financial crunch the tourist state is presently in. A team from the Commission recently visited Goa to determine the annual plan outlay, and suggested that the local authorities should raise the excise duty structure while also taxing the domestic tourists coming here in large numbers.

However, the government has not responded so far. Both measures may prove fatal for the local tourism industry which is already on decline due to overcrowding, lack of infrastructure and lack of administrative control.

Although Goa is a favourite destination for the foreign tourists, the tiny state also receives almost 80 per cent domestic tourists out of 1.2 million who visit south India to enjoy the coastal beauty. Yet another attraction for the Indians is the liquor available for a song.

The PC team led by its member-secretary S R Hashim and Montek Singh Ahluwalia, however, suggested to levy taxes on domestic tourists for revenue generation since foreign tourists are already highly taxed.

Pointing out that Goa's excise duty structure is low, and lower than even Pondicherry's, Ahluwalia also suggested to levy more tax on quality brands of liquor in ad-valorem and not on per litre basis. There is no other way to make the growing industry self-sustaining, the PC team said.

However, Hashim fully agrees with Chief Minister Dr Wilfred de Souza's contention that the tourist state contributes almost Rs 40 billion every year in terms of foreign exchange through tourism, mining and port operations while it receives no financial assistance from the Centre to build the infrastructure which would support these three key sectors to grow.

The Planning Commission assured the Goa government to help in raising assistance through external borrowings from international institutions, provided the packages are linked to development of panchayat and municipal communities and not the industry alone.

One such proposal of water consolidation programme worth Rs 11 billion, which includes development of water supply, irrigation, sanitation, sewerage and soil conservation, is still pending before the water resources ministry since it clashed with the sanctions imposed on India after the nuclear explosion at Pokhran.

The state authorities, however, admit that no comprehensive programme for infrastructural development in terms of roads, bridges, energy and communication facilities has been prepared yet. On the contrary, the new coalition government is still lobbying with the Centre for one-time grant of Rs 1.5 billion, to be utilised in these areas.

Regarding changing the Gadgil-Mukherjee formula, due to which Goa's central assistance is being slashed remarkably, the final decision would be taken at the National Development Council meeting after taking note of various complaints of all the state chief ministers, Hashim said.

Meanwhile, the Planning Commission has fixed Goa's annual plan outlay at Rs 2.91 billion by granting a loan of additional Rs 200 million, to be divided equally for rural roads, bridges and minor irrigation. The authorities expect a loan at least eight times that to overcome the current financial crisis.