The Malaysian Insight

THE proposed departure levy on air travellers will replace the tourism tax in September, said ministry sources, adding that it will make it easier for visitors to the country.

Tourists are already being overtaxed in Malaysia as they have to pay the tourism tax and sales and services tax, which are both driving up travelling costs, they said.

The departure levy, meanwhile, is expected to generate some RM1 billion in revenue, the sources told The Malaysian Insight.

This is based on Malaysia’s estimated annual departure of 30 million passengers, of which 13 million are to Southeast Asian countries.

The tourism tax was implemented in September 2017, charging foreigners RM10 per night’s stay, while Malaysians are exempted.

The Finance Ministry said the government collected RM134.5 million from the tourism tax last year, meaning the departure levy could potentially gather 10 times the revenue.

Removing the tourism tax will also be in line with the World Trade Organisation’s rules against double taxation, said the sources.

“The Tourism, Arts and Culture Ministry has agreed to stop collecting the tourism tax, and is waiting for the cabinet’s approval to make it official,” said a source.

According to a Finance Ministry announcement in March, Sabah, Penang and Selangor collected the most in tourism tax, with the three comprising more than 50% of the total collected.

The Malaysian Insight previously reported that industry players are opposed to the departure levy’s implementation now because of the global economic slowdown and push towards zero-emissions industries.

They also said it will affect the Visit Malaysia 2020 campaign to attract more tourists, both foreign and local.

There are also those who argue that the departure levy will unlikely affect people who can afford to travel abroad, as they can afford to pay it.

Last month, Finance Minister Lim Guan Eng said the departure levy will be imposed only for international air travel, and will not involve other modes of transport.

The Malaysian Insight reported that first- and business-class passengers will pay a higher departure levy soon, as Putrajaya looks at introducing new rates to allow the rich to subsidise the poor in air travel.

The report, quoting sources, said under the restructured plan, first- and business-class passengers will pay a maximum of RM150, compared with RM20 for economy-class travellers.

The new levy is expected to be introduced in September, pending cabinet’s approval. – May 19, 2019.