DOMESTIC tourists and registered hoteliers feel they are in a corner and helpless against the tourism tax which Putrajaya plans to impose from July 1.

Many, especially the hoteliers, are critical of the move which they feel is a hindrance to domestic tourism.

Some were resigned to the fact that there was no stopping the government from collecting more tax even as the cost of living keeps going up.

“If the cost of living is going up, then it must be natural for the ‘cost of holidaying’ to be up as well,” a Penangite, who only gave his name as Loo, said.

“Everything is more expensive. Did you think the government would stop after the GST (goods and services tax)? It’s so easy to collect tax from the people.

“The perception is the government doesn’t have money, right? So of course they will tax the people even more,” said the man in his 30s.

Loo was asked what he thought of the new tourism tax that is based on the rating of registered accommodation premises.

Five-star accommodation will be levied RM20 per room per night; four-star (RM10); three to two stars (RM5); and non-rated accommodation premises (RM2.50).

Tax draws mixed views

Despite his skepticism, Loo did not think the tax would affect him much, although he admitted that RM20 per night was steep.

But then, it is for a five-star hotel room – the kind he would never book for his local trips with family and friends to Kuala Lumpur, Malacca and Langkawi. He only goes for three-star or budget hotels.

“I don’t think we need more than two nights. So that amounts to RM10 extra per room, RM20 for two rooms.

“That is not too bad, especially if the bill is split. Nobody says we have to sleep in five-star hotels,” he said when met at a mall in George Town.

A primary school teacher from Kampar, who gave her name as Sarah, also said one should holiday according to one’s means.

“For people who book into five-star hotels can afford rooms priced over RM800 a night, another RM20 is probably nothing,” she said.

Spending two nights in George Town during the current school break, Sarah said she and her friend booked a room for about RM70 a night in the city via Airbnb.

Marketing manager Cindy Ling, 33, from Kuala Lumpur, said the new tax was “a bad idea for the country’s domestic tourism”.

She said some states like Penang and Malacca already had hotel levies per night; and with GST included, guests would be paying three different taxes.

“That’s crazy. It probably won’t have much of an impact on foreign tourists because of the exchange rate, but it may hurt domestic tourism.

“Many Malaysians are already looking at holiday destinations overseas, like Thailand and Indonesia, due to the more attractive, and sometimes cheaper deals,” she said.

She added this could also lead more travellers booking rooms with unlicensed businesses like homestays or short-term holiday rental homes.

Unhappy hoteliers

Ling’s last point struck a chord with many hoteliers. The Malaysia Association of Hotels (MAH) president Cheah Swee Hee said in a statement yesterday that the tax model was unfair and would burden hotels as well as consumers.

He said less than 15% or 3,126 of accommodation providers in Malaysia were registered while 6,452 were unregistered, and 11,698 provide accommodation through Airbnb.

“Moreover, the rules governing the operation of the tax do not clearly address how unregistered accommodation providers, including those operating under the umbrella of Airbnb, would be brought into the system.

“Even if these providers are registered, the proposed rate for ‘unrated’ providers is significantly lower or subject to exemption, although such providers are in direct competition with the rest and are providing accommodation of similar quality,” he said.

Cheah also said MAH, the Malaysian Association of Hotel Owners and Malaysia Budget Hotel Association had jointly sent a memorandum to the Finance Ministry, Tourism and Culture Ministry, and the Royal Malaysian Customs Department to express their concerns.

“The associations feel that this contribution should be evenly shared across all participants, including those who operate outside the current system, and the cost of collecting the tax should be kept minimal.”

Unfair to ‘tax collectors’

MAH Penang Chapter chairman Khoo Boo Lim agreed that the arrangement was unfair to registered hotels, making them tax-collecting agents, when other accommodation might be exempted from the same task.

“Small-time accommodation providers like those with fewer than 10 rooms may not have to collect the tax, so places like homestays will not be affected.

“Is it better not to be registered then?” he said, adding that when the GST was implemented, registered hotels had to reprogramme their systems and go through extra administrative work.

“On top of that, we also face fines if we don’t pay the tax,” he told The Malaysian Insight.

Khoo’s counterpart in Alor Star, MAH’s Kedah and Perlis Chapter chairman Eugene Dass, also said it was unfair to “punish the law-abiding ones”.

He said hoteliers were not against the tax but they were “uncomfortable” with the federal government using hotels to collect tax.

“Our view is in line with the national MAH’s stand. We are not against the government imposing tax. We are just uncomfortable about being made tax collectors.

“The government should collect the tax directly. Why use hotels when only fewer than 15% are registered?” Dass said.

Extra tax puts off hotel guests

At present, hotels in Penang and Langkawi island, both popular tourist destinations, impose levies on hotel rooms per night.

In Penang, guests pay RM3 per night at five and four-star hotels, and RM2 per night at three-star and below. The state government introduced the levy in June 2014.

In Langkawi, hotel guests pay a tourism promotion fee of RM9 per night at seven-star hotels, RM7 (six-star), RM5 (five-star), RM3 (three- and four-star), and RM1 (one- and two-star). The fee was introduced in July last year.

Khoo and Dass also expressed concerns that the additional tax by the federal government would burden domestic tourists.

Khoo said the existing hotel levy in Penang was still okay, but the federal tourism tax was higher.

He said the government could target just the foreign tourists with the tax, but even then some long-staying foreigners might be unhappy about the extra expenses.

“We have guests who come for long stays. They may be here for an entire month to escape the winter in their countries.

“They may make some noise over this new tax. There is no stopping them from going elsewhere for their winter break,” said the Lone Pine Hotel general manager.

Uncertainties over new tax

Dass said there was still uncertainty if the plan to impose the new tourism tax would go ahead, following the concerns raised by hoteliers nationwide.

Khoo said if it was to go ahead, hoteliers should be given time to adjust.

“When MAH attended a meeting with the Tourism Ministry, I was told many questions were asked. The ministry said it would sort them out.

“I think the government will go ahead with it. I hope we will be given time to adjust.” – June 12, 2017.