Putrajaya embarrassing themselves with tourism tax policy

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By Fahmi Fadzil

The announcement today by Tourism and Culture Minister Nazri Aziz that the tourism tax will only be applicable to foreigners at a flat rate of RM10 per night per room – is an embarrassing climbdown by Putrajaya.

It is also the third announcement in which details of the policy have shifted markedly.

The first announcement, on June 9, declared that beginning July 1 this year, hotels would be taxed between RM2.50 and RM20 per room per night, with the aim of collecting nearly RM700 million per year.

The second announcement, on June 22, declared that three-star hotels and below would not be taxed, but news reports stated that the policy was still aimed at collecting nearly RM700 million per year.

With today’s announcement, in which it was stated the policy would come into effect August 1, there was no mention at all of a target amount that the government hoped to collect.

This should not be the way to craft government policy, especially one with as wide-ranging an effect as the tourism tax which impacts the tourism industry, state governments, and consumers in general.

Yet this is exactly what happens when Putrajaya bulldozes bills through Parliament. Had various state governments been consulted, this move would not have been rebuked so publicly by Sabah, Sarawak, and most recently Selangor.

Furthermore, with this latest announcement, what is the total revenue that Putrajaya aims to collect (its return on investment, or ROI), and what will the total cost of implementing and enforcing this policy be?

Will foreign tourists be able to circumvent paying the tax through loopholes such as having local friends book the rooms for them? What are other potential loopholes, and how does the government plan to plug them?

So many questions, so few answers.

But this lack of consultation, engagement, and even transparency with various stakeholders and organisations prior to the announcement of the policy is typical of Umno-BN.

The regime has been in power for so long that, with few exceptions such as the recently-passed Domestic Violence Act, it rarely believes that it needs to engage stakeholders in a comprehensive, systematic manner.

Nazri and Umno-BN must find all the negative feedback and public backlash very taxing. Perhaps it is time for Umno-BN to go on a holiday from Putrajaya after GE14 in order to learn to govern Malaysia better.

Fahmi Fadzil is PKR Communications Director.

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