MALAYSIA: Postpone Tourism Tax To Next Year, Government Urged

Chief Minister Abang Johari Openg said this was because many local tour agents and hotels have already made and paid forward bookings for their packages for early next year.

“Give us time till early next year. Then we can implement the tourism tax,” he was quoted as saying at a Hari Raya gathering in Samarahan on Wednesday.

The tourism tax was originally scheduled to come into effect on July 1. However, it was postponed after opposition by tourism industry players as well as the Sarawak and Sabah state governments.

Tourism and Culture Minister Nazri Aziz said the implementation of the tourism tax had been postponed to Aug 1 as some systems were not yet in place.

The tourism tax will see local and international tourists having to pay a levy to operators of registered accommodation premises.

The tax per room per night for non-rated hotels will be RM2.50, while the tax for two-star hotels will be RM5; three-star, RM10; four-star, RM15; and five-star, RM20.

Malaysians will be exempted from paying the tourism tax when they stay in hotels rated three stars and below.

Abang Johari added that the collection from the tax must be fairly distributed to Sarawak.

This was in line with what Sarawak Tourism, Arts, Culture, Youth and Sports Minister Abdul Karim Rahman Hamzah had said in June.

Karim said then that the state government had no choice but to accept the implementation of the tourism tax as it had been passed in Parliament.

“We want our share from the tourism tax collection to go straight to the state government and not be channelled through other agencies or any other means,” he added.

Parti Warisan Sabah (Warisan) says Tourism and Culture Minister Nazri Aziz’s latest remarks about the tourism tax leave more questions than answers.

Yesterday, Nazri said the tourism tax was meant to plug the deficit in the ministry’s advertising spending budget due to the massive cut in the tourism promotion budget from RM200 million to RM110 million this year.

Nazri also said the depreciation of the ringgit had made promoting Malaysia overseas more expensive.

“Just two years ago, when the ringgit fell to its lowest value in 17 years, Nazri said the depreciation of the ringgit was good for tourism.

“Now he’s blaming the depreciation of the ringgit for the higher cost of promoting tourism overseas,” Warisan vice-president Junz Wong told FMT.

He was referring to Nazri’s controversial remark in 2015 that the depreciation of the ringgit benefitted tourism as it made Malaysia very affordable for foreigners.

“If the depreciation of the ringgit means the government has to pay more for tourism promotion overseas, maybe Nazri should lead the way and cut down on his trips overseas since these too become more costly with the ringgit’s depreciation,” Wong said.

He added it was also “strange” that despite Putrajaya hailing the GST as a “saviour” of the economy, raking in RM59.72 billion as of last November, the ministry still needed to introduce the tourism tax to make up for cuts in the ministry’s advertising budget.

“Nazri said that the ministry’s budget was reduced from RM200 million to RM110 million. That’s a deficit of RM90 million.

“Compared with the billions collected in GST, RM90 million is a small amount. Couldn’t Nazri have requested for more funds rather than impose a new tax? How have the billions in GST been used?”

Wong said he hoped Nazri wasn’t implying that the government didn’t have money as that would be very worrying.

The Likas assemblyman said Nazri should explain why the government needed to introduce a burdensome tax just to make up for RM90 million.

“Nazri said the tourism tax will bring in RM654.62 million if there is a 60% occupancy rate at the 11 million hotel rooms in the country.

“If the cut in the ministry’s advertising budget is only RM90 million, what in the world does it need over RM500 million extra for? How will this extra revenue be spent?”

Referring to Nazri’s previous comments about the tourism tax revenue being divided equally between Peninsular Malaysia, Sabah and Sarawak, Wong asked if this meant Sabah and Sarawak’s respective state tourism ministries will get to decide how their states are promoted.

“Since Sabah and Sarawak have their own tourism ministries, they should be given their share of the tourism tax as they would know best how to promote their states.”

Wong added that Nazri should also respond to a recent China Press report that the ministry allegedly expedited the implementation of the tourism tax in a bid to overcome a RM250 million deficit incurred by the Tourism Board.

Quoting sources, the Chinese daily reported that the Tourism Board had failed to properly plan its expenditures, especially when it came to promoting tourism in countries like China and Japan.

The shortfall in the board’s finances continued for the past two years, the report said.

Likening the board’s spending to “a running tap”, the newspaper reported the federal government was unwilling to cover the RM250 million bill.

“This is a very serious allegation and perhaps the Malaysian Anti-Corruption Commission should look into this. Alternatively, Nazri could make the Tourism Board’s accounts public for everyone to see,” Wong said.

Meanwhile, PKR’s Wong Chen said the budget cuts faced by the tourism ministry were a symptom of shrinking government revenues due to low oil prices, the sluggish economy and poor dividends from government-linked companies (GLCs).

“The problem is made worse by poor spending priority, corruption, mega projects and bad governance.”

He said although he understood that Nazri was trying to “shore up” his own ministry’s budget with the tourism tax, he could be setting a bad precedent for other ministries.

“What if more ministries decided to follow him and also raise their revenue by imposing some new tax? That would make the revenue stream of the federal government uncoordinated resulting in many unintended policy consequences.”

He added that the tourism tax would affect domestic tourism as well as burden the hotel industry as a whole.

The Kelana Jaya MP said if the government couldn’t raise revenues, it should root out corruption and cut down on “frivolous protocol spending”.

“Taxing the people more will only make things worse.”

The tourism tax was originally slated to come into effect on July 1 but was postponed due to opposition by tourism industry players as well as the Sarawak and Sabah state governments.

The tourism tax will see local and international tourists having to pay a levy to operators of registered accommodation premises.

The tax per room-night for non-rated hotels will be RM2.50, while the tax for two-star hotels will be RM5; three-star, RM10; four-star, RM15; and five-star, RM20.

It was also reported recently that Malaysians may be exempted from paying the tourism tax when they stay in hotels rated three-star and below.

Locals staying at hotels rated three stars and below might be exempted from the new tourism tax, says Treasury secretary-general Mohd Irwan Serigar Abdullah.

He said the government is still studying the details and will make an announcement soon.

“Certain criteria might be imposed, such as people staying in three-star hotels and below being exempted.

“These are among the things that we are studying and will announce later,” he told reporters after launching the global entrepreneurship competition in Subang near here today.

Asked about the method used to collect the new tourism tax, Irwan said it would be collected by the Customs Department, which is also the agency that enforces the GST.

Tourism and Culture Minister Mohamed Nazri Aziz recently said the new tax would be enforced as scheduled on July 1.

He said the gazette on the tourism tax was automatic and in accordance with the country’s procedures when approved by the Parliament.

The Padang Rengas MP added that the tax was applicable to all registered hotels and inns.

The tourism tax is fixed and charged on a per-room, per-night basis.

The tax is RM2.50 for non-rated hotels, RM5 for two-star hotels, RM10 for three-star, RM15 for four-star and RM20 for five-star.

When winding up the debate on the Tourism Tax Bill in the Dewan Rakyat on April 6, Nazri said the tax would be able to bring in an income of about RM654.62 million if there was a 60% occupancy rate at the over 11 million hotel rooms in the country.



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