The Hotel And Restaurant Association (Western India) - HRAWI, on Wednesday urged the Maharashtra government to roll back the 5 per cent increase in Value Added Tax (VAT) on liquor served at bars and restaurants across the state.
On October 22, the Maharashtra government raised VAT for permit room liquor service by 5 per cent, resulting in a new total rate of 10 per cent, according to the state government notification.
HRAWI in a representation submitted to the chief minister Eknath Shinde, deputy chief minister and finance minister Ajit Pawar, and tourism minister Girish Mahajan requested the rollback of the 5 per cent increase in VAT on liquor served at bars and restaurants across the state.
Expressing concern and surprise at the unexpected increase in VAT on liquor, HRAWI has stated that the significant hike in taxes will have adverse effects on the hospitality industry, particularly on restaurants and bars and subsequently impact the state's tourism sector.
"Tourism is a vital contributor to the country's economy, accounting for approximately 9 per cent of the GDP and employing over 12 per cent of the workforce.
'The affordability of liquor is crucial in the tourism sector. The increase in VAT in our state is in stark contradiction to this, and will adversely affect both domestic and international tourism. Affordability is key for tourists, and this decision hampers the initiatives taken to attract visitors. We urge the government to reconsider the decision to increase the VAT, keeping the larger picture of our economy in mind,” HRAWI President Pradeep Shetty said.
An increase in yearly excise fees followed by the doubling of VAT on liquor is likely to have a negative effect on businesses, while reasonable liquor prices encourage spending, boost revenues and enhance the overall appeal of Maharashtra as a tourism destination, HRAWI vice-president Chetan Mehta said.
"The hospitality industry is just about recovering from the pandemic's blow. Further price hikes will dampen the spirit of business owners and may lead to undesirable outcomes, such as increased illegal activities. We appeal to the government to consider the long-term consequences of such decisions," Mehta added.