Goa hits holiday ‘homes’ with tax

PANAJI, India, Nov 11, (AFP): Second homes in Goa owned by people from outside the Indian resort state are to be slapped with tax of up to $10,000 in a bid to make property more affordable for locals, the government said Friday.

“The idea is to impose tax of 200,000 to 500,000 rupees (about $4,000 to $10,000) per annum,” Chief Minister Digambar Kamat said. “The tax would be levied with retrospective effect.”

The move comes amid concern that the purchase of holiday homes, particularly by wealthier or retired people from places like Mumbai and New Delhi, has pushed up the cost of land and houses for native Goans.
Foreigners are officially barred from buying property or land in India but some overseas nationals are thought to get around the rules by using local proxies.

The former Portuguese colony, with its long sandy beaches and laid-back atmosphere, has been a haven for foreign tourists since the days of the hippie trail in the 1960s and 1970s.

Some 400,000 people come to the state every year from abroad.

The committee that recommended the occupancy tax, which will be implemented from a date yet to be fixed, said many second home-owners only came to Goa once a year during holiday season or at New Year.

As a result, the properties were unoccupied most of the time.

Exemptions were granted to second home-owners who have business in the state because of their contribution to the local economy.

Carnival Economy

Till 2010, Goa did not have a single Audi. Now, there are at least 50 Audis and more than 100 Mercedes on the state’s streets,” says Panaji-based businessman Sandesh Sadhale. The remarkable rise in number of high-end cars is just one of the things that justify Goa’s billing as the most improved small state as far as its consumer market is concerned. The rising purchasing power of Goans is leveraged on three industries: mining, tourism and gambling. These industries generate almost 60 per cent of employment in the state. Nearly 15,000 people in the Rs 16,000-crore mining industry earn Rs 1,800 each daily. The result is that even villagers can afford to buy bikes and repair their homes. “Mining is caught in scam controversies but the positive side of the industry is that it has generated wealth,” says Kirit Maganlal, an official of the Goa Chamber of Commerce and Industry.

Goa Tourism Director Swapnil Naik’s efforts to brand the state as the world’s holiday destination has borne fruit. More than 26.42 lakh domestic and foreign tourists visited Goa in 2010, a 5.6 per cent growth over 2009 figures. In tourism-based small industries, the daily income for employees is around Rs 1,500.

The government’s decision to allow 22 casinos in the state has generated employment for nearly 5,000 people. The casinos give around 1,000 staff a monthly income of Rs 25,000. “Even a Class XII dropout can easily earn Rs 25,000 a month in a casino,” says Shrinivas Nayak, spokesperson for CP Group, the largest casino company in Goa.

During April 2010 to February 2011, 18,555 two-wheelers in the price range of Rs 40,000-50,000 and 6,217 above Rs 50,000 were sold in the state. Also, 7,222 cars ranging between Rs 3 lakh and Rs 5 lakh and 4,907 cars above Rs 5 lakh were sold over the same period. According to the state’s Economic Survey, over 50,000 vehicles get registered every year. On November 30, 2010, the number of vehicles registered in the state was 7,65,588.

Increased earnings have reflected not just in increasing spending but increasing savings too. Not surprisingly, there were 556 banks in Goa on September 30, 2010. That’s one bank branch for every 4,000 people against a national average of one for every 14,000.