Wednesday, May 10, 2017

The news on Tourism Tax Bill to benefit Sabah is not fake news?



The news on Tourism Tax Bill to benefit Sabah is not fake news?
 The Sabah Association of Tour and Travel Agents (Satta) on 3rd May, 2017 welcomed Tourism and Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz’s announcement that the 70 per cent of the revenue collected from tourism tax which will come into force on July 1 this year is to be divided equally between Sabah, Sarawak and Peninsular Malaysia.
Nazri has announced that 30 per cent of the tourism tax revenue would be spent on upgrading tourism infrastructure, while the 70 per cent would be divided into three equal parts and allocated to Sabah, Sarawak and Peninsular Malaysia respectively.  Sabah’s portion would be 23.33 per cent of the tourism tax.
Liaw of SATTA said Sabah has 29,720 hotel rooms, which constituted less than nine per cent of the 304,000 registered hotel rooms nationwide.
When winding up the debate for the Tourism Tax Bill on 6th April 2017, Mohamed Nazri said revenue from Tourism Tax would be in the region of RM654.62 million if the overall occupancy rate for the 11 million "room night" in the country can achieve 60 per cent.

The Tourism Tax Bill 2017 which was recently passed in Parliament will exclude accommodations such as homestays, kampung stays and pusat latihan asrama (boarding schools), said Deputy Tourism and Culture Minister Datuk Mas Ermieyati Samsudin.

On tourism, Mas Ermieyati said they expected some 32.2 million visitors to Malaysia this year.
Tourist receipts rose by 18.8%, contributing RM82.1 billion to the country's revenue in 2016 against RM69.1 billion in 2015
.
State Tourism, Culture and Environment Minister Datuk Seri Masidi Manjun said Sabah received an all-time high of 3.43 million tourist arrivals and RM7.25 billion tourism receipts in 2016  

What Nazri said about the purpose of the Tourism Tax is too good to be real as a certain portion of the tax collected would be channelled to Sabah for improvement in the much lacking tourism infrastructure.

I have yet to sight the Tourism Tax Bill 2017 as it progresses to the Dewan Negara.

Isn’t it all national revenue by whatever name is channelled to the national coffer and part and parcel of the operations and allocations of the national fiscal budget annually by the Finance Minister rather than that any other minister has the power to do allocation of the tax in the fashion mentioned in the press statement?

How much such tax is collected is very dependent on foreign tourists coming to Malaysia. Has the Minister considered that many hotel rooms are occupied by local visitors and not as tourists hence such rooms so occupied would not be levied any such tax?  So this can present problem to the hotels to identify tourists from local occupants or visitors. By the same argument, how accurate would be the amount of tax to be collected based on the occupancy rate alone?

It is equally in doubt how would the money/tax allocated to Sabah to be disbursed to the tourism sector. When and  who would be charged with the management of such fund of say 23.3% portion to Sabah?  If profligacy and mismanagement occurs, then the purpose of the Tourism Tax is defeated.  The new tax can be an issue to the tourists affecting the arrivals.
Of course Sabah would need a lot more fund from various revenues so derived from Sabah like the 40% thereof to be returned to Sabah for decades in accordance to Malaysia Agreement 1963.

With the introduction of GST at 6%, Sabah did not get anything like 40% of GST so collected on trade activities in Sabah by resident and non resident (KL based) companies. On the other hand Sabah retains its sales tax of 7% on palm oil and 15% on gambling tickets when such taxes should have been abolished with GST.

I hope Prime Minister cum Finance Minister would confirm that the news as reported is not fake news as the PM warned people not to be deceived by fake news in his key note address at the 19th Asia Oil and Gas Conference in KL on 8th May, 2017.  
      Joshua Y. C. Kong 10 May, 2017

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