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Jun 06, 2011 at 01:13pm IST

India on IATA Wall of Shame for high service tax

Singapore: India was on Monday put on the 'Wall of Shame' by the IATA for imposing high service tax on air tickets when aviation sector was growing at a high pace, with the world airlines' body warning the country not to kill the "goose that lays golden eggs".

The government was put on the Wall of Shame at the Annual General Meeting of the International Air Transport Association (IATA), along with the European Union Parliament and the governments of the UK, Germany and Austria, for imposing high taxes on air travel.

Asserting that aviation fuelled global trade stimulated economies and restored government budgets, IATA s Director General and CEO Giovanni Bisignani said "don't kill the goose that lays golden eggs... Tax the bankers who created the mess. Their billions of dollars in bonuses should help clean it up."

India on IATA Wall of Shame for high service tax

India was put on the Wall of Shame at the Annual General Meeting of the International Air Transport Association.

Asking the UK, German, Austrian and Indian governments to "stop compromising economic growth with aviation taxes," he said these governments "need a textbook on aviation s role as an economic catalyst. The first chapter is entitled 'Basta (enough) to More Taxation'."

"Taxing aviation does not pay. The Dutch government repealed a $ 412 million departure tax because it cost the Dutch economy $ 1.6 billion. Similarly, the Irish Government is planning to cancel its $ 165 million Travel Tax because it has cost the economy $ 494 million and 3,000 jobs," Bisignani said at the IATA's 67th Annual General Meeting here.

Charging EU Parliament with "ignoring international law" and deciding to impose carbon emission trading scheme to charge airlines, the IATA chief said "also on the Wall is the hit parade of government tax bandits."

While the UK has imposed "the highest aviation tax in the world" of $ 4.5 billion, Germany imposed a $ 1.3 billion departure tax followed by Austria's $ 119 million tax and "India for the $ 450 million impact on aviation of its Service Tax in complete contravention of ICAO rules," Bisignani said.

The slide show accompanying Bisignani's speech had the pictures of top leaders of these countries, including Prime Minister Manmohan Singh when the IATA chief spoke about taxation in India.

Naresh Goyal and Vijay Mallya, chiefs of Jet Airways and Kingfisher Airlines, and Air India officials were present at the conference that was inaugurated by Singapore s Deputy Prime Minister Tharman Shanmugaratnam.

This is the second time that India has been put on this wall - the earlier occasion being in June 2009 for steep hike in charges imposed on airlines by private-led Delhi and Mumbai airport developers.

However, Bisignani had a word of praise too for India.

Referring to the robust growth in India and China, he said the two countries should take up the global leadership role.

"In place of our traditional leaders, I am convinced that China and India will soon become the driving force of aviation in the century. They will grow aviation stronger through change, replacing artificial barriers with commercial

opportunities."

He also said India was "developing Delhi as a regional hub" for airlines.

Calling on the global aviation industry to build a platform for a sustainable future based on "renewed leadership, continuous innovation, and a united stand in addressing challenges and finding solutions," he asked the oil industry to commercialise sustainable bio fuels at competitive prices.

"Sustainable bio fuels, with their potential to cut the industry s carbon footprint by up to 80 per cent, could make a major contribution to the industry's programme to fulfill its climate change commitments."

Noting terrorism, wars, pandemic fears, earthquakes and tsunamis, failing economies and skyrocketing fuel prices had affected the global aviation industry, the IATA chief said though the airlines today were safer, stronger, leaner and greener, "sustainable profitability remains elusive."

"We expect airlines to make just $ four billion profits this year on revenues of $ 598 billion."

Observing that safety had improved 42 per cent since last year with the loss of one aircraft for every 1.6 million flights, he asked the industry to "continue the momentum of the last decade to drive change across the value chain, not as a response to crises but as a new way of doing daily business."

Bisignani said the IATA demanded that Europe abandon its plans to include international aviation in its Emissions Trading Scheme (ETS) from 2012 and impose emission charges on airlines.

"Uncoordinated and punitive regional measures distort markets and undermine global efforts to reduce emissions. The EU ETS is a $ 1.5 billion cash grab that will do nothing to reduce emissions.

"BASTA! (Enough!) to Europe's short-sighted actions. It's time to be serious about climate change and honest in developing global solutions."

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