A celebrity checks into a star hotel.
The tariff starts at INR 7500 ($110) a night and goes up to INR 12,000 ($175) based on whether you want a standard room, a large room, a corner room, or a room with a view.
The celebrity uses the fitness center – one of the perks you get in any good hotel these days.
After the workout, the celebrity orders two bananas. An immaculately dressed waiter supplies the bananas on (presumably) a sanitized plate.
The problem starts when the bill arrives.
The hotel has charged INR 444 ($6.50) for the bananas. The amount includes 18% of sales tax (9% federal and 9% state tax).
As you would expect, the celebrity is outraged.
Before anyone can say “bananas,” the celebrity takes to social media and bemoans how the hotel has taken a customer for a ride.
Followers and others jump in and offer their “horror” stories of being taken for a ride.
The authorities don’t want to be left behind. They serve a notice on the hotel. Not getting a reply (allegedly) they impose an INR 25,000 ($360) penalty on the hotel.
What puts me off in this mundane episode is the hypocrisy embedded therein.
For a start, the celebrity represents an industry that is allegedly one of the prime drivers of the parallel economy.
If we take reports even at a discounted value, actors get insane amounts. Has anyone questioned the “pricing policies” of actors?
Cinemas that show the output (pictures) charge amounts that have no rational basis. Has anyone expressed outrage?
Why should the authorities get into the business of pricing? It is a matter between the hotel and the customer. If you buy bananas from a street vendor, you don’t pay any sales tax. The same bananas, when offered to a customer in a star hotel, attracts 18% tax. Will someone, please explain the logic, if any, in all of this?
Anyone staying in a hotel and willing to pay upwards of $100 a night should know that when one buys anything in the hotel, one is not paying for the “product” alone. One is paying for the ambiance, the central air conditioning, the wall-to-wall carpeting, the ever-so-courteous staff, clean rooms, and fresh flowers in the room. The hypocrisy lies in soft-pedaling the fact that actors can charge $20 million or more without batting an eyelid.
One of our avowed objectives is to improve “Ease of doing business.” The World Bank appears to agree to the extent that the country’s ranking on the parameter has jumped from 100 to 77.
However, if imposing a penalty on a business for allegedly charging more for bananas when it is clear that the hotel has done nothing illegal (the bill shows sales tax at 18%, and that is a revenue for the government) is our policy, we are probably conveying how difficult it is to do business here.
As for the celebrity, I have a simple question and a suggestion: Did anyone force you to stay at the hotel? Or to order the bananas without ascertaining the price? The next time you want to complain, think again, and please have answers for all that is wrong with the industry you represent.
Disclaimer: I have no commercial or other interest either in the hotel or in bananas.