KARACHI, June 1: Pakistan Hotels Association has urged the government to provide tax-holiday for new hotels and also to restructure the taxation system to promote hotel and tourism industry.

Speaking at a press conference on Saturday after a PHA executive committee meeting, the PHA officials suggested that the tax holiday for developed cities be for five years while for less developed cities or the federal capital the holiday be for seven to 10 years.

They said that the PHA has sent the above and other suggestions to the federal government so that these could be incorporated in the ensuing budget and the health of the hotel industry, which had been seriously affected first by the Sept 11 incident and then by the recent terrorist attacks on the Frenchmen in the city, could recover.

They said that the present rate sales tax of 15 per cent was very high and it be reduced to 7.5 per cent. They said that imports of all hotel and restaurants use items including machinery equipment etc be exempted from customs duty and sales tax.

Pointing out that presently income tax of 5 per cent of the total bill, that also included various taxes, was being deducted at source, they demanded that deduction be made on the hotel receipts and not on any other government levies directly recoverable on behalf of the other tax collecting agencies.

They said that sometime back the computing system of advanced taxes which had been changed from “income based” to ”turnover based” be abolished and the old policy of “income-based” be reintroduced.

They said that presently the Sindh government was charging bed tax at the rate of 7.5 per cent ad-volarem on 70 per cent room occupancy as capacity tax on the 4 and 5 star hotels which was very high in the present situation so the rate be reduced to 2.5 per cent and charged on the actual occupancy and not on the capacity basis.

They said that the government had announced in 1999 that the foreigners would have to pay their bills in foreign currency but it had not been implemented, so far.

They said that if it was implemented the foreign currency earning of the country would increase.

They said that though the hotels had been declared an ”industry”, they were still being made to pay the property tax at the rate fixed for commercial category whereas they be charged tax applicable to the industrial units. They said that the CBR be directed to issue necessary notification (SROs) so that the concessions accorded to the industries could be availed by the hotels, which had been given the status of an industry, also.

They also suggested that all the indirect taxes be clubbed together into one and collected by one agency to streamline the collection.

Their other demands included cut on hotel licence fees to Rs 100 for four and five star hotels and to Rs 50 for others; requirement for separate licence for four and five star hotels of TV/VCR/Dish Antenna/radio licence be abolished; and civic agencies be directed to provide clean and potable water regularly without extra cost.

PHA chief Syed Arshad Ali, executive committee members M. Ashraf Butt, Barkat Lassi, Khalid anwer, Arshad Shah, M. H. Qureshi and others also spoke.