Cut taxes for aviation sector, Centre tells states

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The Centre on Friday asked state governments to review and rationalise their taxation policy on jet fuel and land acquisition practices to encourage the expansion of civil aviation sector so that they could themselves reap the benefits of its unprecedented growth.

“States must not look at aviation as a milching cow.

There is cut-throat competition in this sector. Airlines are losing money, mainly because of competition and high taxes,” Civil Aviation Minister Praful Patel said at the first-ever National Civil Aviation Conference, involving state governments, in New Delhi.

He said if the taxes, particularly state sales tax, were rationalised, then it would encourage more airlines to fly into a state, leading to creation of aviation as well as tourism infrastructure that would in turn create jobs and income through a multiplier effect.

The Minister also pointed out that no PSU under his Ministry got budgetary support from the Centre.

“There is a myth about government support to the Ministry. Except for equity in AAI, Air India and some funds for a few airports in the Northeast, these PSUs do not get any financial support.”

On the issue of land acquisition, Patel said while the Airports Authority of India (AAI) and other agencies would help develop airports, it was now the prime responsibility of state governments to provide land for new ones as well as expanding the existing ones.