Kerala gets even with Karnataka, raises tax on tourist vehicles; now operators are in a fix

And what happens to inter-state tourism?
Kerala gets even with Karnataka, raises tax on tourist vehicles; now operators are in a fix
Kerala gets even with Karnataka, raises tax on tourist vehicles; now operators are in a fix
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Kerala appears to have dug its own tourism grave in a bid to get even with Karnataka’s tourist vehicle policy.

In a circular dated July 18, the Kerala Motor Vehicle Department announced a new annual entry tax policy for vehicles from other states with tourist permits. Under the present system, Kerala issues either a 7-day or a three-month permit, and collects tax accordingly. However, this law only applies to states which have already implemented a similar annual entry tax policy. Karnataka has such a policy in place since 2013. 

In effect, a Karnataka-registered tourist vehicle would have to pay an annual tax, irrespective of the duration for which the vehicle would ply in the state. 

It appears that Kerala’s Transport Department only implemented this law to get even with Karnataka.

Transport Commissioner Tomin J Thachankery told The News Minute, "For nearly three years Kerala was charging less than Karnataka. When visitors to Kerala had privilege, while Kerala vehicles in Karnataka were troubled. So this time, we decided to charge same amount of tax which is imposed on Kerala vehicles in Karnataka. This is our policy to the levy same tax that Kerala-registered vehicles pay in other states."  

But the move has had critics in both Kerala and Karnataka, as it would discourage inter-state tourism.

Director of Kerala’s Tourism Department UV Jose says that the move would backfire. “Kerala would lose out on tourism from Karnataka, especially during the Sabarimala season. Trade too would be drastically affected when this order comes into effect,” he said. 

The Kerala tourism department had, in 2013, asked the government to negotiate with Karnataka to reduce its annual tax policy.

“We had proposed for a balance, where Karnataka would bring down their rates and Kerala would increase it accordingly. What is required is negotiation between the two governments. However, what our government ended up doing is to impose the annual tax, which would either completely discourage tourists from visiting Kerala, or drastically impact their inflow,” Jose pointed out.

In Karnataka, tourist vehicle operators are a worried lot. General Secretary of Bangalore Tourist Taxi Owner’s Association Radhakrishna Holla said that they too had tried to make the Karnataka government change its policy. 

“When Karnataka implemented the tax in 2013, we had submitted memorandum to the transport minister and tourism minister pointing out that it would encourage other states to follow suit and make it difficult for Karnataka vehicles to enter other states. However, nothing was done to sort it out,” he said. Now, his predictions have come true.

Regular trips to Kerala are not guaranteed so an annual permit does not make sense, Holla points out. They will no longer be able to ask passengers to pay the tax. 

"For instance, the tax amount for a 4+1 taxi has increased from Rs 50 to Rs 1900. How can we ask the passenger to pay the annual entry tax? That's impractical," Holla says. 

Karnataka’s Minister for Tourism Priyank Kharge says that the department would function in the interest of tourism. 

"Both Kerala and Karnataka attract tourists in large numbers. We need to address this issue, more so because of the proximity in destinations," he said. 

Karnataka, it seems, has finally woken up to smell the coffee available in both states. The Minister said the tourism department hold talks with the transport department and work out measures to solve the crisis. 

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