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Hasty decision

  • The idea is good, but the way the government rushes through its implementation is disconcerting.

Sin Chew Daily

The Customs Dept removed the notice on tourism tax from its official website on the reason the rule had yet to be signed by the King.

According to the notice, tourism tax would be imposed with effect from August 1 this year while hotel operators are required to register with the Customs Dept from July 1.

The tax will be imposed based on the star-rating of individual establishments, ranging from RM2.50 per night to RM20. The authorities also said they would meet up with hotel operators to explain the new tax.

Hotel operators are currently adopting a wait-and-see attitude as they are obviously not adequately prepared for the new ruling.

As a matter of fact, similar taxes ranging from RM2 to RM9 per night have already been imposed by state governments in more popular destinations like Melaka, Penang and Langkawi

Under the Tourism Tax Bill adopted by the Parliament in April, tourism tax will be implemented nationally.

According to the tourism ministry, the tax will be used to develop the country's tourism industry, reinforce existing travel-related infrastructure and facilities, and organize promotional events and campaigns. The objective is consistent with that of other countries imposing similar taxes to ensure the sustainable development of the tourism industry.

While the intention has been good, travel operators are of the opinion that this is not the right time to impose the new tax given the fact that domestic tourism industry is still in its infancy, with a relatively high weightage of foreign tourist consumption. They feel that hastily imposing tourism tax will only discourage Malaysians from traveling in the country. Moreover, inflationary pressure is building up at this moment.

The local hospitality industry is currently suffering from sluggish sales with occupancy rates as low as 30% to 40%, in addition to escalating cost as a consequence of rising goods prices, GST and the introduction of minimum wage scheme.

The new tax is also not auguring well for the government's aspiration to get tourists to stay longer in the country because the longer they stay, the more they will have to pay.

The authorities have been reminded that not all hotel guests are tourists, as many are actually travelers on business or seeking medical treatment, attending short courses, or visiting friends and relatives. The new tax will only add to their financial burden.

Hotel operators also propose that any tourism tax should be implemented progressively, beginning with establishments with four-star ratings and above, before expanding to lower star-rated hotels and guest houses. Some also feel that tourism tax should be imposed on foreign tourists only as domestic tourists have had enough of taxes to pay.

What concerns the operators and the general public is whether the additional tax revenue will be utilized as per its purpose.

Many facilities in the country's major tourist destinations are dated and in a state of disrepair owing to inadequate funding, in addition to environmental pollution, inconvenient transportation and generally poor service standards that have collectively turned many tourists away. This will not help improve the image of the country's tourism industry. As such, we urgently need the tax input to upgrade.

Hotel operators are not wholly against tourism tax, but this is just a question of timing. The government should first have a heart-to-heart talk with the relevant operators before finalizing the details and timetable.


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