Travel agents yesterday objected to the proposed value added tax (VAT) on their services saying it would threaten survival in times of a downturn in aviation traffic and migrant worker outflow.
“The overall traffic situation is bleak. We fear that the number of passengers will drop to 19 lakh this year from 22 lakh in 2008. At this stage, VAT will make survival of the travel agents tough,” said MA Muhaimin Saleh, president of Association of Travel Agents of Bangladesh (ATAB), a group of more than 1,600 agents.
His concerns came at a press conference at the ATAB office as the government proposes to withdraw the VAT exemption facility on travel agents and manpower exporters in fiscal 2009-10, as part of its initiative to widen the tax net.
Saleh said a slump in migrant outflow, due to global recession, has already put nearly 40 percent of travel agencies on the brink of closure.
“About 70 percent of their business comes from issuing tickets to migrant workers. But the flow of migrants has decreased,” he said.
Moreover, stiff competition among travel agents also eats up part of their commissions. Agents said airlines pay them as much as 7 percent as commission on fares on each ticket.
“But we cannot retain even 1 percent of the commission, due to tough competition. Under such circumstances, it will be tough to bear the VAT,” said the ATAB president.
Saleh also said the VAT imposed on recruiting agents would burden the poor migrant workers, who usually go abroad by selling all their belongings.
“On the one hand, the government favours reduction of migration costs and on the other hand, it imposes tax. This is a paradox,” said AKM Bari, secretary general of ATAB.