Kerala cuts tax on aviation fuel

New Delhi: Close on the heels of the huge cut in taxes for aviation turbine fuel (ATF) by the Andhra Pradesh government, the LDF government in Kerala on Thursday decided to cut the tax from 32% to 4%.
Announcing the cut in the state budget for 2008-09, Kerala finance minister TM Thomas Isaac said he expected that airlines would pass on this concession to passengers by reducing fares.
The move, taken by the tourism superbrand state with the maximum number of international airports, is expected to have more than just an impact on travelers and airlines in the state.
Both national and private carriers, of late, have been demanding a reduction in state taxes on aviation fuel as soaring fuel cost had seriously dented their profitability.
Welcoming the decision, civil aviation minister, Praful Patel said, “It will boost tourism and economic activity in the state. I wish other states also take a cue from Andhra Pradesh and Kerala”.
The cut in ATF prices is expected to lead to around Rs 30-50 crore in savings for the airlines, senior officials from Air India and SpiceJet said.
After the Andhra Pradesh government cut the taxes from 31% to 4%, most states have been evaluating the decision to reduce the tax on ATF.
06/03/08 Financial Express

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Categories: Indian Aviation- In General Mar 2008