Phuket governor backs proposal to raise hotel tax to 3%

Phuket governor Nirat Pongsitthithavorn has backed a proposal to raise the provincial tax on hotels from 1% to 3% to generate more revenue for local development and tourism promotion.

The proposal was discussed at a workshop on tourism management amid the global energy crisis, attended by Mr Nirat and Raywat A-reerob, chief executive of the Phuket Provincial Administrative Organisation.

Mr Nirat said Phuket relies heavily on the service sector, including hotels, tourism and restaurants, and that the province’s employment is also concentrated in those businesses. He said the higher rate would therefore be proportionate to Phuket’s economic structure.

He said legally registered hotels are already subject to regulations that allow for a maintenance fee of 1% to 3%, with the money used to improve the province. He also said many unregistered hotels avoid paying tax.

According to Mr Nirat, hotel tax revenue has recently been used by the PAO to fund international roadshows promoting tourism abroad. He said collecting up to 3% in provincial tax would support similar marketing efforts and help Phuket continue attracting 14 million tourists a year.

He gave an example of a hotel room priced at 1,000 baht a night, saying a 3% local development fee would amount to 30 baht.

Mr Nirat said increasing the hotel tax from 1% to 3%, as already permitted by law, would bring the PAO about 1 billion baht a year. If unregistered hotels were also taxed, revenue could rise to 1.5 billion baht, he said.

He said about 80% of hotels are not currently registered and called for them to be brought into the system. If they are not encroaching on public land or beaches, they should apply for the proper permits, he said, adding that even unregistered hotels would still have to pay hotel maintenance taxes to the Phuket PAO.

Mr Nirat said the province would have the Revenue Department follow up to ensure all taxes are paid, and that this could be done without changing any laws.

He said stronger hotel tax collection would support Phuket’s sustainable development.