Friday, June 16, 2017

It is unnecessary and untimely for Putrajaya to impose tourism tax.

Media Statement by Yeo Bee Yin, ADUN for Damansara Utama on Saturday 10 June 2017 in Petaling Jaya.

It is unnecessary and untimely for Putrajaya to impose tourism tax.

We are very concerned with the rush of Putrajaya into imposing tourism tax, leaving hotel operators and those who are involved in confusion. It was reported that the taxation rate will be RM20, RM 10, RM 5 and RM2.50 per room per night for hotels with five star, four star, one to three star and other ratings respectively.

The lightning speed of the implementation of the Tourism Tax Bill 2017 passed just a few months ago shows that Putrajaya’s coffer is running so dry that it is going all out to milk more monies from the people in any way possible.

This swift implementation of the law passed in Parliament is in sharp contrast with the implementation of Child Offender Registry, which is provided by Child Act Amendment 2016. The government couldn’t complete the registry, which contains records of convicts who committed crimes against children including sexual crimes, nine months after the law was passed in the parliament (April 2016) and six months after the law was gazetted (July 2016)[i]. (The registry is finally ready now with slightly more than 100 child offenders record.) On a contrary, for Tourism Tax Act 2017, the government can’t wait to execute the law even before it is gazzetted! 

We do not see that there is a need to execute Tourism Tax Act 2017 and even if it is necessary, this is an extremely unsuitable time.  Its implementation will hurt the tourism industry, which is still on the way to recovery. Malaysia tourism suffered drop in tourist arrivals in 2015, recording tourist arrivals of 25.72 million compared to 27.44 million in 2014 with total receipts of RM 69.1 billion in 2015 compared to RM 72 billion in 2014. It recovered slowly to achieve 26.76 million arrivals with total receipts of RM 82.1 billion in 2016.[ii]

Imposing tourism tax even as our total tourist arrivals has not recovered to 2014 level is counterproductive to whatever efforts that have been made to increase the number of tourist arrivals to Malaysia. In addition, domestic tourism may also be hurt as now local tourists will need to pay tourism tax on top of goods and services tax (GST), which is already driving local tourism cost high.

The Tourism and Culture Minister, Datuk Seri Nazri Aziz, has said that the revenue from tourism tax is important for the government to develop and promote tourism industry in Malaysia. He estimated that tourism tax will bring in income for the government of around RM 650 million for 60 percent occupancy rate at over 11 million hotel rooms in the country and over RM 800 million if the occupancy is more than 80 percent. What is the guarantee that the tax collected is really used to develop and promote tourism industry? Will the minister tell us how his ministry is going to use the money for?
Even as tourism industry is climbing up the rank of becoming one of the top contributors to the country’s GDP and contributing significantly to the government’s revenue via corporate and income taxes as well as GST, the Tourism and Culture Ministry has been experiencing continuous budget cut since 2014 with total budget to the ministry dropped from RM 1.44 billion in 2014, to RM 1.37 billion in 2015, to RM 1.22 billion in 2016, to RM 1 billion in 2017[iii].  Such trends raise serious doubts that the more than RM 600 million tourism tax revenue will really be used for the purpose of developing and promoting tourism industry in Malaysia. Or will the monies be wasted away elsewhere?

With that, we call upon Putrajaya to stop the implementation of Tourism Tax Act 2017.