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Kathmandu Sunday November 05, 2000 Kartik 20, 2057.
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Hoteliers vexed at extra
service tax
By Gopal Tiwari
KATHMANDU, Nov 4 - The country's one
of the best foreign currency earners, the hotel industry, is beset with obstacles with
hotel employees demanding a raise of 10 percent extra service charge since several years.
Hotel employees are pressing the
hoteliers to make 10 percent service charge mandatory in the hotel industry. If not
resolved by November 18, they have already announced to go on a nationwide strike
effective from November 19 for an indefinite period.
Shyam Sunder Lal Kakshapati, Chairman of
Tourism Committee under the Federation of Nepalese Chambers of Commerce and Industry
(FNCCI) criticized the decision of the trade unions to levy extra 10 percent service
charge on the hotel industry instead of tips.
"Tips is a voluntary amount of money
being provided by the tourists on the basis of the best hotel services. However, to
convert tips into tax is not convenient for tourists as well as the whole tourism industry
that will ultimately shake out the entire labor market," Kakshapati said.
Independent Hotel Workers Union (IHWU) has
been demanding with the hoteliers for years but the solution is not in sight yet.
Talking to The Kathmandu Post Mukunda
Neupane, President of General Federation of Nepali Trade Union (GFNTU) said, "Our
demand is very genuine which will ultimately enhance national revenue." Neupane said
that there is a need to regulate the earnings of the hotel industry in order to share the
profits earned by the hoteliers.
"Our step is to make hotel
accounts very transparent that will accrue benefits for the government and hotel
employees," he said.
"If the government and the hotel
industry did not solve our problems in time, we will organize a nationwide strike
effective from November 19, that will cost hugely for the whole economy," he warned.
"Despite the hoteliers generating big
earnings, the workers are not benefiting from it. The revenue-sharing is a must for smooth
running of the country's growing tourism industry by maintaining transparency and to boost
the national income," opined Neupane.
However, tourism entrepreneurs worry,
"If the hotel employees force the hoteliers to levy 10 percent extra charge besides
12 percent (existing 10 percent VAT and 2 percent tourism service fee), the whole industry
will be shut down immediately. This will send a very bad message to tourists across the
world and hit Nepal's whole tourism industry in the long run, they feared.
Shanker Koirala, Joint Secretary at the
Ministry of Tourism and Civil Aviation (MoTCA), is quite hopeful that the row between
hotel employees and hoteliers regarding 10 percent service charge will be resolved at the
earliest possible. He said that dialogue is going on between the representatives of
hoteliers and union leaders.
Madhav Om Shrestha, Executive Director of
Hotel Association Nepal (HAN) regarding the practice of 10 percent service in other
countries said, "A few number of hotels in India charge service fee that include
banquet facilities as well."
"Even in Pakistan and Bangladesh, 10
percent service charge is not in practice yet, and Europe has a different way of taxing.
"How it can be possible to sustain in
Nepal in a slowly growing tourism market to levy extra service charge," he questions.
Instead, it will greatly discourage tourists to visit Nepal. "If it is enforced, the
whole hotel industry will collapse," Shrestha worried.
Meanwhile, hoteliers have already submitted
a memorandum regarding the extra 10 percent service charge to the prime minister, deputy
prime minister and other concerned ministers requesting to prevent such a grave situation
in the country.
But trade union leader Neupane said that
service charge is in practice in many countries of the world. This initiative of the
employees is to accrue more revenue to the national coffer.
Tourism entrepreneurs Kakshapati believes
10 percent service charge would be an extra burden to the tourists as it is not like tips.
More than 200,000 people are employed in
the country's tourism sector including hotel industry. The national economy alone received
more than 168 million US dollar from the tourism industry in 1999.
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