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Tax on tourists is indefensible
 

POSTBAG
Copyright 1999 The Bangkok Post
Reprinted with permission
Article date: September 11, 1999
 

In the Bangkok Post business section of Sept 6, Peerawat Jariyasombat reported, and I quote: "...Recently, Akorn Hoontrakul, owner of a deluxe hotel on the island (Koh Samui), said on television that the imposition of the additional tax on hotel services would 'kill' the country's tourism industry..." I was on the iTV programme for a 20-minute interview/discussion. I made so many viewpoints and reasonings that were not reported. The short summary by the Post reporter was not true, not fair and totally misleading.

I did not say that the imposition of the additional tax on hotel services would "kill" the country's tourism industry. I did say, however, that a foreign tourist who refuses to pay the 2% additional room tax can be jailed for a month and consequently the
imprisonment of a foreign visitor would destroy the tourism industry of this country.

This whole business is more complex than that made out by most press reportings over the past several months.

Let me furnish two legal documents for reference: Document one is the Ministry of Interior's Regulation No. 4 (BE 2541) (i.e. AD 1998) signed on Dec 14, 1998 by the current minister, giving authority to provincial administrations countrywide to tax
hotel guests (tourists) at not more than 3% of room rates and appointing the keeper/manager of the hotel to be the collector of this provincial room tax for the provincial administration.

Document two is the "Decree of the Provincial Administration of Surat Thani, on the Collection of Tax From Hotel Guests BE 2542" (i.e. AD 1999).

The Surat Thani decree contains 16 articles. I will now quote those relevant articles which are really damaging.

1. Article 5 states that hotel guests (Thai and foreign tourists) shall pay 2% tax on hotel room charges to the provincial administration. (This is in addition to the current 7% VAT which is already charged to room rates.)2. Article 6, the hotel keeper and manager will collect the tax from hotel guests as per article 5 on behalf of the provincial administration.

3. Article 11, any hotel guest who does not pay this tax per article 5 will be sentenced to not more than one month in jail or fined not more than 2,000 baht or imprisoned and fined concurrently.

4. Article 12, any hotel keeper and manager who does not try to collect the said tax per article 6 will be sentenced to not more than three months in jail or fined not more than 5,000 baht or imprisoned and fined concurrently.

Simply put, the laws say that it is "the hotel guest, the tourist" who has to pay this 2% additional room tax to the provincial authorities. If the tourists refuse to pay, they are subject to one-month imprisonment or a fine of 2,000 baht or both.

The keeper/manager of the hotel is bound by law to inform the hotel guests that this provincial room tax payable by the tourists is now enforceable. The keeper/manager of the hotel is the appointed collector of this 2% provincial room tax from the tourists
on behalf of the provincial authority.

I belaboured several times over the past few weeks both in television interviews and in a press conference to the printed press that this is a tourist tax (a person tax) not a hotel room tax. Please just read the laws! I also said that this is a stupid law. To tax
a tourist for holidaying in the provinces of Thailand (except for Bangkok) is laughable.

To imprison tourists who refuse to pay this 2% tourist room tax is to destroy the tourism industry of this country. "Tax is levied on income and consumption, not on people."Who on earth would like to come to holiday in Thailand if they are never certain that they may be subject to pay tourist taxes levied by the central and/or provincial authorities of this country and failure or refusal to pay means a term in prison?I also pointed out this provincial tax law is unfairly discriminatory against the hotel sector and maybe unconstitutional. No other businesses are required to pay this provincial tax. Only the hotel industry is singled out! After all, laws should apply to all equally. This unjust law must be abolished or appropriately amended.

I also suggested that the most equitable and efficient way of raising funds for development of the upcountry provinces is to raise the VAT by 1% or 2% and assign this increased VAT collection of each province to the province for use in its development projects.

--Akorn Hoontrakul
 

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