Cess likely on business class fares

Levy on international air tickets to fund drug research.

International Business Class air fares can become costlier. Prime Minister Manmohan Singh has persuaded Civil Aviation Minister Praful Patel and Finance Minister P Chidambaram to levy a cess on the sale of international air tickets to fund research by pharmaceutical companies to develop drugs to deal with the threat of pandemics like AIDS.

This was an initiative suggested by President Jacques Chirac of France almost a year ago and has become something of a signature tune that is now being sung all over the world. Sixty countries have endorsed the creation of such a fund.

A member of President Chirac's office was here and had extensive discussions over the last two days with the Prime Minister's Office, the finance ministry and the civil aviation ministry. When this idea was mooted, the Indian government was less than enthusiastic about it.

However, with the prime minister recognising the diplomatic and economic possibilities of contributing to such a fund, it is the high-end traveller who will have to pay for it.

Explaining the creation of the fund against the backdrop of last year's tsunami disaster, President Chirac said at Davos in January this year, "Let us look at the hypothesis of a contribution levied on fuel used by air or sea transport. This will simply represent the end of an exemption regime. The fuel used by these sectors, which contributes to the greenhouse effect and the pollution of our planet, is currently practically exonerated from all taxation. This will be another way to mobilise several billion dollars.

"There is yet another way "� a small levy on the three-billion plane tickets sold each year worldwide. A contribution of one dollar per ticket, for example, will raise at least three billion dollars, without compromising the economic balance of the sector."

President Chirac will be here in February on a state visit. French foreign office officials say the fund is intended to be flexible and can be imposed on any class of travel. It is expected that once the fund is set up, business-and first-class pass-engers may have to pay more, ranging from 1-2 per cent of the value of their tickets.