Taxation
Waive it off or make it mandatory: Restaurateurs on service charge
From increase in the base price of food items, creating chaos and dispute during billing, increase of tip culture and an affect in the operating cost of the restaurants and employment -- these will be some of the ramifications in the food and beverage sector if paying of service charge is made optional, say restaurateur.
 
Eatery owners, who have their outlets in different parts of the nation, are in a fix since the Department of Consumer Affairs (DCA) issued a statement saying that customers dissatisfied with service at any hotel or restaurant can opt for the service charge not being levied as this is optional or discretionary.
 
Priyank Sukhija, who owns Lord of the Drinks, Tamasha, The Flying Saucer cafe and Warehouse cafe, told IANS: "Making service charge optional or discretionary will affect employment. Service charge is not a way for us to earn money, but it's for staff welfare and motivation. Leaving it on customer discretion, in my opinion, is not right.
 
"The decision should have been clear enough in the way that either the government should have completely waived it off or make it mandatory. They could have been better way like may be reduction of service tax."
 
The decision by DCA was taken in lieu of complaints received from consumers that many hotels and restaurants charged "service charge in the range of 5-20 per cent, in lieu of tips" and consumers were "forced to pay irrespective of the kind of service provided".
 
Varun Puri, owner of Imly, feels the step will lead to unnecessary chaos and disputes during the billing. 
 
"Who is going to decide why guests shouldn't be billed with service charge. This is also going to affect the operating cost for the restaurants. Earlier what the customers paid as service charge, will now fall upon the head of the company to increase staff's salary," Puri told IANS.
 
Bhuvnesh Bhalla, director of Delhi-based restaurant Aanch, said: "With the implication of this rule, our staff will ask for more hikes as this income was purely their incentive apart from their monthly income. As any waiter earns approximately Rs 3000-4000 through this service charge per month in addition to their monthly income, it will come onto the owners of restaurants."
 
For Laurent Samandari, founder of L'Opera, one consequence could be an increase in the base prices at restaurants, to make up for the lost revenue."
 
Some restaurant owners feels that the service charge used to "omit the iridescent behaviour of the server (staff) who would demand tips with their body language", but now things won't be same.
 
Prashant Khurana, executive Chef at Andrea's Eatery, told IANS: "The service charge was also helpful for making up for restaurant breakages of crockery and glassware. Also, the most important thing was that the compulsory service charge has almost omitted the indecent behaviour of the server (staff) demanding the tip from a guest with his most inappropriate body language."
 
The move could also have a positive effect.
 
"This rule will bring in a little positive approach in the F&B industry as now every restaurant and hotel authorities will improvise on their services and quality, which will help them to get more customer footfall and revenue generation," Ashish Massey, director, The Ancient Barbeque, told IANS.
 
Inderjeet Banga, owner of Prankster and The Pirates of Grill, agreed.
 
"For restaurants and hotels who take guest satisfaction for granted, this is a big wake-up call. Also, if we see the long-term effect, this shall make better relations between service boys and guests on the floor. The others who don't want to perform, have to perish," Banga told IANS.
 
Umang Tewari, who owns The Junkyard Cafe, Garam Dharam, Vault Cafe and more under Big Fish Ventures, has already removed the service charge from all his restaurants as he does "not believe in over-burdening our consumers". But there's also Ajay Sharma, franchise owner of Playboy Cafe, who said: "As long as service charge is mentioned in our menu, it cannot be termed as unfair."
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

RAVI RAM PV

2 weeks ago

Service charge is loot. It is like that Rs. 1 per litre of petrol/diesel that is supposed be a road cess and which is supposed to improve the roads. Never saw roads improve. Same way, who knows what the restaurant owner does with the service charge. For ex. buffets charging service charges is downright absurd. Who gets a share there? There are no waiters, I serve my own food. If I am happy, I will tip. Why force my hand?

Arpita Padiyar

3 weeks ago

Scrap service charges. We will tip when we are happy. Doesnt make sense to put 20% over the bill. Tooo much.

Arpita Padiyar

3 weeks ago

Scrap service charges. We will tip when we are happy. Doesnt make sense to put 20% over the bill. Tooo much.

Arpita Padiyar

3 weeks ago

Scrap service charges. We will tip when we are happy. Doesnt make sense to put 20% over the bill. Tooo much.

Aditya

3 weeks ago

I think this is a good move as it will make restaurant owners to focus on quality of service.If this is removed completely then they will make it up by raising the prices but now they cannot do that, instead they have to step up. A good move, though there will be some dispute on billing as the rule says it will be decided by customer not sure why Varun Puri says who will decide ! Folks step up, Amazon provides free return delivery and refund in case not satisfied.They have been working on drone delivery aggressively , I am afraid there will be food marketplace at AMAZON and drone delivers the stuff !

India needs to prepare itself to face 2017 environment disaster
While environment diplomacy at the UN climate change conference in Marrakech last November became uncertain after Donald Trump, a climate change sceptic, won the US presidential elections, experts have suggested that India must tread its own path and start investing to prepare for the future.
 
"India needs to invest in infrastructure and prepare itself to face climatic repercussions this year. During the drought last year, the country's net water reserve capacity was only 20 per cent; in March, hailstorms destroyed the wheat crop," Sanjay Vashist, Director, Climate Action Network South Asia, told IANS.
 
Over 330 million people in India were affected by one of the worst droughts that spilled over to neighbouring Sri Lanka, Bangladesh and Nepal as well.
 
Experts like S.K. Sarkar, Director, Water Division, at The Energy and Resources Institute (Teri), had cautioned that by 2050, India will be water-scarce.
 
"Extreme events which are more random now force millions to migrate -- and for Bangladesh and Nepal, India is the destination. India needs to pull up its socks. We just faced cyclone Vardha, Chennai Floods in 2015 were devastating and so on," Harjeet Singh, Global lead on Climate Change at Action Aid, told IANS.
 
A study released at the 22nd Conference of the Parties to the UN Framework Convention on Climate Change (COP22) at Marrakech, Morocco, says that natural disasters annually force about 26 million people into poverty.
 
Both the economic and human cost due to such disasters are underestimated by 60 per cent.
 
"The impact of extreme natural disasters is equivalent to a $520-billion global loss in annual consumption," a World Bank report said at COP22. It also noted that poor people pay the heaviest price.
 
According to the World Meteorological Organisation (WMO), the global temperature is 1.2 degrees Celsius above the pre-industrial level, making 2016 the warmest year followed by 2015 and 2014. The Island Nations now fear of their existence.
 
"We have to start worrying about such trends. India need to focus on mitigation or adaptation if the environmental damage is irreversible... our solution will depend on resources and we have other priorities like food security," said Karan Mangotra, from TERI's Centre for Global Environment Research.
 
According to Mangotra, to avoid such dangerous trends, India needs to streamline all regulatory aspects for collective efforts, strengthen research capabilities and evolve a business model for affordable technology.
 
In the midst of all this, with Trump's triumph, the Paris agreement that aims at keeping the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels -- and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius -- as also the developed world's $100 billion per year commitment for the developing nations for switching to greener technologies, could be curtailed.
 
"What we saw at Marrakech has to be operationalised, but embracing Paris Agreement under Trump's administration is highly unlikely, especially given the key people he is appointing to his office like the CEO of ExxonMobile," Harjeet Singh said.
 
A UN report has estimated the requirements of developing countries at between $140 billion and $300 billions by 2030 and between $280 billion and $500 billion by 2050 to make up for the climate change.
 
The report also held lack of funds as a major stumbling block in meeting goals under the Paris Agreement and said that developed countries have failed to undertake the measures required to achieve the global temperature goals.
 
"For India, clearly finance remains an important issue... most of the economic sectors in India depends on weather. If the US does pull out of the Paris deal, a huge financial burden will be created; India has to be ready," Singh said.
 
India at COP22 was praised for its commitments and initiatives in clean energy and coal dependency reduction and it was said that the country is set to "over-achieve" its emission intensity targets.
 
The Government also approved the negotiating position adopted by India at the 28th Meeting of the Parties to the Montreal Protocol held last year in October at Kigali in Rwanda. The Montreal protocol aims to phase out the ozone depleting substances (ODS).
 
Meanwhile, Union Environment Minister Anil Madhav Dave also hinted at India's preparedness as 2016 ended.
 
"If Bengaluru wants to save itself from 2017 monsoon floods then it will have to unclog the drains," the minister, who had listed the Bengaluru crisis as a "preferred task" while taking office in July 2016, said in a tweet on New Year's Eve.
 
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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Soon-to-be US energy secretary Rick Perry’s Texas Giveaways

Donald Trump's selection of Rick Perry to lead the Department of Energy has prompted many Democrats to question Perry's qualifications for the position. While he governed a state rich in fossil fuels and wind energy, Perry has far less experience than President Obama's two energy secretaries, both physicists, in the department's primary work, such as tending the nuclear-weapons stockpile, handling nuclear waste and carrying out advanced scientific research. That's not to mention, of course, that Perry four years ago called for doing away with the entire department.

 

However, there's one realm in which Perry will have plenty of preparation: doling out taxpayer money in the form of government grants to the energy industry.

 

What often gets lost in all the talk of the Texas job boom under Perry is how much economic development strategy was driven by direct subsidies to employers who promised to relocate to the state or create jobs there. Of course, many states have for years engaged in the game of luring companies with tax incentives. But by the count of a 2012 New York Times investigation, Texas under Perry vaulted to the top, giving out $19 billion in incentives per year, more than any other state.

 

Perry's economic development largesse came in many forms, but among the most high-profile were two big pots of money that he created while in office. In 2003, he founded the Texas Enterprise Fund, which he pitched as a way to help him close the deal in bidding wars for large employers thinking of moving to the state. Over the course of Perry's tenure, which ended in early 2015, the fund gave out more than $500 million. In 2005, Perry created the Emerging Technology Fund, which was intended for start-ups. It gave out $400 million before being shuttered last year by his Republican successor, Greg Abbott.

 

Disbursements from both funds were controlled by Perry, the lieutenant governor and the speaker of the House. The technology fund had a 17-member advisory board, all appointed by Perry. With such scant oversight, it did not take long for political favoritism and cronyism to creep into the programs. In 2010, the Texas Observer reported that 20 of the 55 Enterprise Fund grant recipients up to that point had contributed directly to Perry's campaign or the Republican Governor's Association, of which he became chairman in 2010. Also in 2010, the The Dallas Morning News reported that some $16 million from the Emerging Technology Fund had gone to firms backed by major donors to Perry. For instance, after Joe Sanderson received a $500,000 Enterprise Fund grant to build a poultry plant in Waco in 2006, he gave Perry $25,000. And the Emerging Technology Fund gave $4.75 million to two firms backed by James Leininger, a hospital-bed manufacturer and school-voucher proponent who had helped arrange a last-minute $1.1 million loan to Perry in his successful 1998 run for lieutenant governor and contributed $239,000 to his campaigns over the ensuing decade.

 

In theory, companies receiving Enterprise Fund grants were accountable for their job-creation pledges and had to make refunds when they fell short. In practice, the numbers proved hard to quantify and few companies had to make refunds. The watchdog group Texans for Public Justice determined that by the end of 2010, companies had created barely more than a third of the jobs promised, even with Perry's administration having lowered the standard for counting jobs. And in 2014, the state auditor found that $222 million had been given out to companies that hadn't even formally applied for funds or made concrete promises for job creation. "The final word on the funds is that they were first and foremost political, to allow [Perry] to stand in front of a podium and say that he was bringing jobs back to Texas," said Craig McDonald, the director of Texans for Public Justice. "From the very start those funds lacked transparency and accountability."

 

This being Texas, it was not surprising that many of the leading beneficiaries of the taxpayer funds were in the energy industry. Citgo got $5 million from the Enterprise Fund when it moved to the state from Tulsa in 2004, even though it made clear that it had strategic reasons to move there regardless of the incentive. Chevron got $12 million in 2013 after agreeing to build a 50-story office tower in downtown Houston — a building that three years later remained unbuilt.

 

Most revealing of the problems associated with the Perry model of taxpayer-funded economic development, though, may have been a $30 million grant in 2004 to a lesser-known outfit called the Texas Energy Center. The center was created in 2003 to be a public-private consortium for research and innovation in so-called clean-coal technology, deep-sea drilling, and other areas. Not coincidentally, it was located in the suburban Houston district of Rep. Tom DeLay, the powerful House Republican, who, it was envisioned, would steer billions in federal funding to the center, with the help of Washington lobbyists hired by the Perry administration, including DeLay's former chief of staff, Drew Maloney.

 

But the federal windfall didn't come through, and the Enterprise Fund grant was cut to $3.6 million, which was to be used as incentives for energy firms in the area. Perry made the award official with a 2004 visit to the Sugar Land office of the Greater Fort Bend Economic Development Council, one of the consortium's members, housed inside the glass tower of the Fluor Corporation. In 2013, when I visited Sugar Land for an article on Perry's economic development approach, his administration still listed the Texas Energy Center as a going concern that had nearly reached its target of 1,500 jobs and resulted in $20 million in capital investment.

 

There was just one problem: There was no Texas Energy Center to be found. Here, from the 2013 article in The New Republic, is what I discovered:

 

The address listed on its tax forms is the address of the Fort Bend Economic Development Council, inside the Fluor tower. I arrived there late one Friday morning and asked for the Texas Energy Center. The secretary said: "Oh, it's not here. It's across the street. But there's nothing there now. Jeff handles it here." Jeff Wiley, the council's president, would be out playing golf the rest of the day, she said. I went to the building across the street and asked for directions from an aide in the office of DeLay's successor, which happened to be in the same building. She had not heard of the Texas Energy Center. But then I found its former haunt, a small vacant office space upstairs with a sign on an interior wall — the only mark of the center's brief existence.

 

Later, I got Wiley on the phone. There has never been any $20 million investment, he said. The center survives only on paper, sustained by Wiley, who, for a cut of the $3.6 million, has filed the center's tax forms and kept a tally of the jobs that have been "created" by the state's money at local energy companies. I asked him how this worked — how, for instance, was the Texas Energy Center responsible for the 600 jobs attributed to EMS Pipeline Services, a company spun off from the rubble of Enron? Wiley said he would have to check the paperwork to see what had been reported to the state. He called back and said that the man who helped launch EMS had been one of the few people originally on staff at the Texas Energy Center, which Wiley said justified claiming the 600 jobs for the barely existing center.

 

In at least one instance, this charade went too far: In 2006, a Sugar Land city official protested to Wiley that, while it was one thing to quietly claim the job totals from a Bechtel venture in town, it was not "appropriate or honest" to assert in a press release that the Texas Energy Center had played a role. "There is a clear difference between qualifying jobs to meet the [Energy Center's] contractual requirement with the state and actively seeking to create a perception of [it] as an active, successful, going concern," wrote the official, according to Fort Bend Now, a local news website. In this case, reality prevailed, and Wiley declined to count the Bechtel jobs.

 

Today, the $20 million in capital investment from the Texas Energy Center has vanished from the state's official accounting of Enterprise Fund impact, but the 1,500 jobs remain, part of the nearly 70,000 jobs that the state claims the fund has generated.

 

Drew Maloney, the former DeLay chief of staff who lobbied for federal funds for the Texas Energy Center, is now the vice president of government and external affairs at the energy giant Hess Corporation.

 

And Perry is on the verge of being put in charge of vastly larger sums of taxpayer dollars to disburse across the energy industry. (Requests for comment from the Trump transition team went unanswered, as did a request to Jeff Miller, an unofficial Perry spokesman who now works for Ryan, a Dallas-based tax consultancy that helps clients, including ExxonMobil, get tax incentives from Texas and other states.) The Department of Energy has a budget of around $30 billion, oversees a $4.5 billion loan guarantee program for energy companies, and distributes more than $5 billion in discretionary funds for clean-energy research and development. (The loan guarantee program was the source of the $535 million loan that solar-panel maker Solyndra defaulted on in 2011, but it has had plenty of successes as well.) Many of the department's programs have well-established standards for disbursement, but as secretary, Perry would have a say over at least some of the flow of dollars.

 

Trump himself, in announcing his nomination of Perry, said he hoped Perry would bring his Texas strategies on energy and economic development to Washington. "As the Governor of Texas, Rick Perry created a business climate that produced millions of new jobs and lower energy prices in his state," Trump said, "and he will bring that same approach to our entire country as secretary of energy."

 

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