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Unregulated Businesses

Bring illegal tourism businesses under the ambit of law

The state government’s decision to set up a task force to regulate the multitude of unlicensed business establishments in the tourism sector is a right step. It is necessary to bring them all under the ambit of law in order to prevent them from eating into the business of licensed establishments and also to increase revenue collection by the state. On the government records, only 2,000 tourism-related businesses exist. These businesses contribute significantly to the state exchequer and their contribution has been growing each passing year. According to the Travel and Tourism Association of Goa (TTAG) at least 6,000 unregistered tourism-related businesses are operating in different parts of the state. The TTAG and the Small and Medium Hoteliers Association of Goa have time and again been bringing to the state government’s notice the harm being caused to them by illegally operated tourism businesses. They have been highlighting that conversion of second homes into boutique hotels and bed and breakfast ventures by their owners was increasing at alarming pace, without bringing a single rupee of the income earned to the government or local bodies. There are many owners of houses and flats that are renting out their spaces to tourists through online room aggregators and they are not paying any taxes either.  

It is surprising to note that it took the state government such a long time to wake up to the illegal businesses being carried on by owners of flats, houses and villas. Illegal businesses have been mushrooming in the past ten years. The scale is only growing, as many of the flats, houses and villas and second homes are vacant and unoccupied, and more and more owners are monetizing their spaces without taking the required permissions of panchayats, municipal bodies or the tourism department. These illegal businesses often out-price registered businesses by offering cheaper tariffs.

The government’s task force must identify the illegal businesses as soon as possible. The task force should take the help of organizations of registered businesses to identify illegal businesses. The illegal businesses should not be closed. They should be brought under the ambit of regulation. They should be registered and they should be subject to the laws and rules about waste disposal, environment protection, guest identification and taxation as the registered businesses are. That would make tourism a level playing field. The absence of enforcement of regulations and regular inspections has allowed at least 6,000 entities to operate without any permission. There is a possibility of illegal operators having conned their guests and collected taxes and fees from them but not paid the same to the government. The earnings of illegal tourism-related businesses are thus presumed to be much higher than those of the registered businesses per customer.

That illegal operators in the tourism sector managed to evade laws is an indication of the gross failure of government to regulate a sector that has developed over the years as a major revenue generator. The government must ensure that every illegal establishment should register with the departments concerned, including tourism, food and drugs administration and excise. The panchayats and municipal authorities must help the state government identify the illegal tourism-related businesses. Of course, there must be a nexus between officials of local bodies and some of the unregistered tourism-related businesses. That nexus might come in the way of precise listing of the unregistered tourism-related businesses. There could be patronage of local politicians too behind the mushrooming of such illegal businesses. It remains to be seen how strongly the state government deals with these illegal businesses. Proper action by the government would protect legal businesses in tourism and enhance government income. It would also protect tourists and Goans. For instance, as of now FDA does not check the illegal businesses in food, which means their customers might not be getting standard food at those establishments. The excise department does not know what kind of beverages illegal establishments are selling or serving. The police stations do not know the identities of persons illegal lodgings are taking in as guests.

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