The announcement today by Tourism 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 embarassing climbdown by Putrajaya.
It is also the third announcement where details of the policy shifted markedly.
The first announcement, on 9th June, declared that beginning 1st July 2017, hotels would be taxed between RM2.50 and RM20 per room per night, and aimed to collect nearly RM700 million per year.
The second announcement, on 22nd June, declared that 3-star hotels and below would not be taxed, but news reports wrote that the policy still aimed to collect nearly RM700 million per year.
With today's announcement, where the policy is supposed to come into effect on 1st August, there was no mention at all of a target amount that the government hopes 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 be the total cost of implementing and enforcing this policy? 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 to various stakeholders and organizations prior to the announcement of a 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
KEADILAN Communications Director
26 July 2017