HOTEL TAX? WHAT HAPPENED TO THE GST?

THERE will soon be a tourism tax applied to each hotel room based on their star ratings, and already the objections have been voiced by both people and professional institutions alike. For the state of Penang, it will be the imposition of a double tax, with one already put in place by the state government since June 2014.
Reading the announcement, I couldn’t help but wonder if this will somehow trigger hotel customers to inadvertently cause their favourite hotels to get bad reviews in order to lower the star ratings to avoid the higher taxes.

The explanation sheet by our customs department noted that this collected tax will be used to maintain and fund tourism facilities throughout the country.

So, I guess we can all breathe a sigh of relief, our minds at ease that our government knows how to keep tourist facilities up to date and well maintained.

Yes, I am being sarcastic and for good reason.

In the past years, we have seen an upsurge of tourist arrivals that should have brought in revenue.

We have also seen the introduction of the Goods and Services Tax (GST) which inevitably meant that whatever spent by tourists and even locals would end up in the government coffers at the rate of 6%.

Of course, foreign tourists may claim back whatever GST is spent in Malaysia, but at what rate? I doubt it is a humongous amount compared to the collection made by our royal customs.

Plus, if tourism was that highly prioritised, then why did we slash the Tourism Ministry’s federal budget to the point that they had to shut down the Tourism Malaysia offices as a cost-cutting measure?

Something isn’t right in this decision, because as far as I know, tourism facilities have been managed by the entities privatised to do so. The Bird Park has their own company, so does the Zoo, so does whatever national park which has become a tourist attraction. They’ve all collected their own revenues and should be competing by themselves, and running themselves towards at least breaking even.

Of course, some entrance fees have been subsidised by federal funds, but it is unclear at what rate.

What this tourism tax tells me is that none of these attractions are able to maintain themselves or even break even. That says a lot more about how these privatised institutions are being run, rather than the need for a new tax to supposedly bail them out.

I will back taxes because there is a need to collect cash to maintain and develop the nation, which is why I’d back the GST, higher income tax brackets for higher earners and even the local council’s increasing their assessment taxes.

Heck, I’d even back the introduction of GST on petrol products from diesel to gasoline and plastics, to be channeled towards environmental goals and even better public transport. Something that a certain former prime minister said was going to happen with oil revenues when he increased pump prices during his tenure.

But when you exclude home-stays and then charge hotels based on their star ratings instead of a flat percentage rate, it all sounds rather dodgy.

Tourism in Malaysia is based on multiple things, from medical tourism all the way to shopping and clubbing, and all of these would have generated tax revenue through the GST. So the question we need to ask is, where has all the money collected gone to?

Has it gone to defense, agriculture, perhaps even the local councils or even the small and medium enterprise micro loans? Someone has to explaine how tourism was left out in the wind, and why there is a need to now have a tax on hotels.

It is this opaque culture of increasing costs without a proper explanation of where the funds go to that drives people to think negatively of the government.

It doesn’t help that scandal after scandal is showing government officials from the local council, state and federal level are continually being charged with corruption.

The lack of trust in the government plays a huge factor in the introduction of any new expense for the taxpayer, and this will in time guarantee an erosion of political capital.

On the plus side, perhaps the increased tax would be a major factor in more Malaysians leasing out rooms and apartments for short term rent using AirBnB.

– https://www.themalaysianinsight.com

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