Malaysian hotel operators up in arms over tourism tax

Malaysian hotel operators up in arms over tourism tax
Tourists taking a selfie in front of an 18th-century Anglican church in Malacca. Malaysian hotel operators have warned the new tourism tax policy would drive tourists away. Photo: AFP
Published: 4:00 AM, April 7, 2017
Updated: 12:04 PM, April 7, 2017

SINGAPORE — Malaysian hotel operators are up in arms over a government plan to impose tourism taxes on room charges, warning that the policy would drive tourists away.

The Malaysian Association of Hotel Owners (MAHO), a grouping of hotel owners, said the newly passed Tourism Tax Bill 2017 will add to the woes of operators struggling to cope with the Goods and Services Tax (GST) introduced two years ago.

“On top of the extra cost, there will be more (administrative) work for the employees,” the association’s executive director Shaharuddin M Saaid told TODAY in a phone interview yesterday. “It (the hotel industry) will be affected.”

Mr Shaharuddin said the tax will affect domestic tourism as it applies to local and foreign tourists in the country. He also said the tax policy was implemented in top-down fashion.

“The ministry had called for a meeting to inform us (industry players) about the plan ... They told us that it was more or less decided and initial implementation date after Hari Raya Haji (last year),” he added.

Mr Cheah Swee Hee, president of the Malaysian Association of Hotels (MAH), also expressed concern that the tax could create an uneven playing field between the licensed and unlicensed hotel operators.

“The new tax may drive local and foreign tourists into seeking accommodation at places such as Airbnb and unlicensed hotels,” he said, adding that these were not regulated by the law.

Mr Cheah said MAH — an umbrella body for hotels in the country — wants to ensure that the tax is implemented fairly and that locals will not be affected by the decision.

“We are seeking to engage the government on our concerns related to this tax and have sent a letter to the relevant authorities,” he added.

The tourism tax Bill was passed with a rousing majority in Parliament yesterday morning in a record breaking session that lasted for almost 20 hours.

The tax for non-rated hotels will reportedly be set at RM2.50 (S$0.80), while the tax for two-star, three-star, four-star and five-star hotels were set at RM5, RM10, RM15 and RM20, respectively.

In winding up the debate for the Bill, Tourism and Culture Minister Nazri Abdul Aziz said the tax collected would be used to develop the tourism industry and make it even more competitive. Revenue from the tax would come up to RM654.62 million if the overall occupancy rate for the 11 million “room nights” in the country is 60 per cent, he said.

“With proper promotion and 80 per cent occupancy rate, RM872.82 million can be collected,” he added. As of February this year, there are over 3,000 hotels with various star ratings registered with the Tourism and Culture Ministry.

Dr Ramon Navaratnam, chairman of the Centre of Public Policy Studies, noted that it is too early to predict the impact of the tax.

If the facilities provided by the hotels are good, the additional charges would not make a difference in terms of room occupancy, he said.

“Taxation is a flexible instrument and adjustments can be made. If it is undermining the tourism industry, then (the authorities) can make adjustments later on.”

News of the passing of the Bill also led to an outcry among some netizens.

Facebook user C Sing Ow said: “What is the point of enticing tourist to visit Malaysia if you impose this taxation? You will lose more money in terms of the tourist buying and spending (money) on food and other trades. This short-sighted move to tax the tourists is going to backfire.”

Another Facebook user, Myeung Suk, added: “When I’m planning to visit Malaysia, I think I will bring along my tent and camp out in the open garden area at the places where I visit. That way I will save on hotel room rates and tourism tax.”