KARACHI, March 23: The Pakistan Hotels Association (PHA) has urged the government to abolish the Bed Tax that is imposed on the hotel industry, which is not in a position to pay it in the present recession.

Speaking at a press conference on Sunday, the PHA chief Syed Arshad Ali said that there was no justification for the Bed Tax (Capacity Tax) in the presence of a broad based tax like the General Sales Tax (GST), which was already imposed on all products and services being offered by the hotels.

He said that the hotel industry should not be subjected to such additional and unjustified tax, which was highly detrimental to the cause of tourism and for the survival of the industry in the province.

The Bed Tax is, at present, levied on the basis of 70 per cent occupancy of a hotel.

He said that earlier, following the September 11 incident, the then government had reduced the Bed Tax from 70 per cent to 40 per cent, but now, owing to the severe recession and lack of tourism, the hotel business had further suffered.

The PHA chief said that hotels in normal circumstances earned millions of dollars as foreign exchange from their foreign guests, so the hotels should be provided with incentives and facilities that were available to other foreign exchange earning industries.

He said that the hotels, besides paying billions of rupees in taxes to the government were also providing, direct and indirect, employment to hundreds of thousands of people, and if this unjustified tax was not abolished many of the hotels might be forced to close down the business, that would further deteriorate the unemployment situation in the country.