Hotel tax row is really over how money is to be spent

Opinion  |  R Nadeswaran
Published:  |  Modified:

Soon after the March 2008 general election, newly-minted Tourism Minister Azalina Othman cut ties between the federal-funded Penang Tourism Action Council (Petac) and the state government by cancelling the memorandum of understanding (MoU) signed in 2001.

The federal government also cancelled or diverted funds for tourism growth and to carry out major programmes in the state, such as the International Dragon Boat Festival, Lantern Festival, Penang Bridge Run and World Music Festival.

Although that decision was later rescinded, funds for tourism promotion in Penang had been slashed drastically. Except for Chief Minister Lim Guan Eng and his colleagues, there was hardly a whimper as this audacious action was seen as punishing the state and its people for electing not to return the BN government.

Not wanting to lag behind, Penang decided to go on its own in raising money for tourism purposes. In 2014, it decided to collect its own “hotel tax” to be utilised for “the development and promotion of tourism infrastructures in Penang.” It was a paltry RM3 for four and five-star hotels and RM2 for other places of accommodation.

Until March last year, RM15 million had been collected of which only RM690,000 had been spent. Tourism development committee chairperson Law Heng Kiang told the State Assembly that a committee comprising him, Lim, the state exco for local government, Penang Global Tourism general manager, and hotel representatives was formed to decide how the funds should be utilised.

Let’s digress from the war of words between Petra Jaya and Putrajaya and address the issue of the hotel room tax to be introduced next month. The issue is not the quantum or the manner in which the tax is collected. More importantly, it is how the money will be spent. It is said that the money would be used for the promotion of tourism but there are indications the money would be used elsewhere.

Tourism and Culture Minister Mohamed Nazri Abdul Aziz was reported as saying that the tourism tax would be able to generate an income of about RM654.62 million if there was a 60% occupancy rate at the 11 million rooms nationwide.

This means that the ministry will have more than three times the amount that had been allocated in the annual budget over the past 15 years. In August 2015, the Star Online reported that the national budget for promotions and advertising has been cut by RM50 million, 25% of the RM200 million allocated annually for the past 15 years.

This prompted the then Tourism Malaysia chairperson Wee Choo Keong to appeal to the Finance Ministry to reinstate the full amount. He argued that it is justified because the industry brought in more than RM70 billion annually.

While the figures may justify the spending, there is this perennial problem of financial accountability. It is a Malaysian malaise and specifically, the ministry and Tourism Malaysia do not have good records to boast about.

Naturally, all parties including stakeholders do not want to see a repeat of the fiascos and those of associated agencies which came close to insolvency. Dubious investments in overseas restaurants, taxi services and other ventures wiped out millions in its coffers due to poor planning, lack of insight and knowledge and pitiable business acumen.

Besides, the extravagance and spending by Tourism Malaysia officials on their overseas jaunts are no big secrets. Many a jaw dropped when Parliament was told last year that during her tenure as Tourism Malaysia chairperson for a year, Ng Yen Yen spent a whopping RM396,000 on 14 overseas trips. This included two one-day trips to Singapore which cost the government in excess of RM22,000...

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