On-off GST for Food Items While Tourism Tax Looks Set to Go

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For those who didn’t know about yesterday’s news on GST to be imposed on 60 types of food times from Jul 1, it’s been scrapped – a 24-hour about-turn!

GST

Yesterday, according to The Star Online which quoted a news report in China Press, Customs Department director-general Subromaniam Tholasy confirmed that GST would be imposed on 60 types of food items starting Jul 1.

A full statement was supposed to be issued today.

The food items included seafood, vegetables, fruits, tea, coffee, spices and noodles.

“It’s only a few items not consumed by the masses,” Subromaniam said.

Among these were eel, swordfish and imported fruits like avocados, berries, cherries, figs, grapes and nectarines.

Other new items with GST imposed included bihun, kuey teow, laksa mee and coconut oil.

Vegetables that would be taken off the GST zero-rated list were long beans, peas, potatoes, spinach and sweet corn.

Today, Subromaniam said the order was cancelled after the Customs Department had referred the matter to the finance ministry!

A sigh of relief for the rakyat, but what’s going on with a confirmation and then a retraction in the blink of an eye?

For the complete list of zero-rated goods and services, visit gst.customs.gov.my or www.federalgazette.agc.gov.my.

Tourism Tax

It was only last week that tough-talking Tourism and Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz came under fire for his “tactless” remarks of Sarawak minister Abdul Karim Rahman Hamzah.

Claiming he was too old to change his “warrior” style of politics, he refrained from making further comments after the brouhaha.

Now that the dust has apparently settled on the tiff between Nazri and the Sarawak state government, the new tourism tax is set to take off with effect from Jul 1, despite calls by hoteliers to delay it.

The Malaysian Association of Hotels (MAH) had said hotels need at least three to six months to reconfigure their front office systems to implement the tourism tax.

Furthermore, the mechanism of the tax was still unclear, according to MAH president Cheah Swee Hee,

Malaysia Budget Hotel Association (MyBHA) president PK Leong echoed the same sentiment and said he had no idea how the tax would be implemented.

Apparently, the ministry says the tax is included in the room rates while the Tourism Tax Bill 2017 states that it is to be charged separately.

Regarding the tax being imposed only on registered hotels with more than 10 rooms, FMT news portal reported that Cheah said, “Those with fewer than 10 rooms won’t have to collect tourism tax and this means AirBnB operators won’t need to impose tourism tax on their customers even though the service is used primarily by the tourist market.”

“So, ironically, it seems many tourists will actually escape the tourism tax, while locals who aren’t tourists but stay in hotels when they have to travel for work or to visit their children studying in other states will have to pay,” said Cheah.

Cheah claimed that this made the playing field more uneven than it already was as hotels will now have to comply with yet another regulation but AirBnB and illegal hotel operators didn’t have to. On top of that, the latter enjoy subsidised residential rates for utilities, unlike commercial businesses.

Leong also highlighted that it was unfair that only hotels were collecting the tourism tax for the entire tourism industry.

“Only 25% of a tourist’s expenses goes towards accommodation. So, why are the hotels responsible for collecting for the whole tourism industry?

“What about transport and retail?” he questioned.

It was said that the tax would be used to develop the tourism industry, improve tourism facilities and support tourism promotion activities.

According to FMT, China Press, quoting sources, reported that for the past two years the Tourism Board did not conduct proper planning and failed to manage its finances, comparing the board’s spending to a “running tap”.

Reportedly, the federal government was unwilling to pay the RM250m bill and suppliers are owed a lot of money.

It is believed that the tourism ministry had to expedite the tourism tax without consulting industry players, after the finance ministry refused to help, in a bid to overcome the RM250m deficit.

Bottom line: government collects more taxes, Malaysians pay more for local holidays

Making hasty announcements followed by retractions is nothing new from the government. Neither is imposing taxes hastily without proper planning and information that is clear to one and all.

The government needs to hastily get its act together.

The Gist of the New Tourism Tax

The tax, ranging from RM2.50 to RM20 per room per night, will be imposed on all hotels and guest houses with not less than 10 rooms.

Homestays, kampung stays and non-commercial accommodation run by religious or educational institutions are exempted.

The tax rate is fixed according to the following ratings:

  • Five star – RM20
  • Four star – RM10
  • One, two, three star – RM5
  • One, two, three Orchid and non-rated accommodation premises – RM2.50

Tourists also include Malaysians staying at a hotel.

The new tax, which was tabled by Nazri, is forecast to rake in an estimated RM655m to RM873m for the government, based on a 60-80 percent occupancy rate over 11 million hotel rooms in the country.