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Thailand: Clarifying departure levy scuttlebutt
As the general election draws near, implementing collection of a new tax is an extremely sensitive issue and almost unheard of as a political tactic.
Given this backdrop, the Revenue Department sidestepped concerns last week that it is considering a new departure tax on outbound travellers, based on a 40-year-old “emergency decree”.
The department confirmed it has no plans to collect a departure tax, with the public hearing it called via a questionnaire only a “process required by law” to evaluate regulations.
WHY IS THE DEPARTMENT HOLDING A HEARING ON THE TAX AT THIS TIME?
Some people were alarmed to hear about the public hearing on a new departure tax. The hearing is slated for May 3-17.
The decree was passed in 1983 in an effort to increase state revenue.
The law also aims to control capital outflows in order to help alleviate trade deficits and maintain the country’s balance of payments, according to the department. Certain groups of people are exempted from this tax, comprising pilots, flight attendants, monks, novices and Hajj pilgrims.
According to the decree, the maximum levy is 5,000 baht, though the government authorised the Finance Ministry to determine an effective rate.
The ministry issued a ministerial regulation to impose a departure tax of 1,000 baht for air travel and 500 baht for land and sea travel.
The law was in effect for eight years before being shelved in 1991. The ministry issued new rules to waive the tax, citing improvements to the Thai economy that meant the levy should no longer be collected.
In the event there is a legal hearing on the matter, the Revenue Department said a public hearing is in line with the law governing law development and the evaluation of issued laws, passed in 2019.
As a result, state agencies are required to hold public hearings on crucial laws every five years.
According to department spokesman Vinit Visessuvanapoom, the hearing is to review the content of the departure tax law.
“The hearing is not in preparation to impose the tax,” he said.
Mr Vinit said although the departure tax has been waived since July 1, 1991, the department is legally obliged to hold a public hearing on the law to ask for public opinions.
Next year the department plans to hold public hearings on the Petroleum Income Tax Act and the Inheritance Tax Act.
WHAT ARE THE CONCERNS AMONG TRAVELLERS AND TOURISM OPERATORS?
Some countries collect a departure tax, such as Japan, which introduced a rate of ¥1,000 per person (around 250 baht) included in airfare for all international travellers since January 2019.
The UK has an air passenger duty charged on airfare for outbound flights with different “band rates” depending on the destination. The UK’s levy applies to local residents, but excludes inbound international travellers.
A number of local travellers raised concerns on social media about the public hearing on the departure tax, which they described as too expensive.
There is also confusion related to other travel taxes, notably the passenger service charge of 700 baht for international flights collected by the airport authority, while the planned tourism tax of 300 baht for overseas arrivals is scheduled to be collected later this year.
Charoen Wangananont, president of the Thai Travel Agents Association (TTAA), said if the government is publishing information for a public hearing, the questionnaire should be distributed as widely as possible to gauge public opinion, even if the department does not intend to implement a departure tax.
“In reality, we know it would be difficult to collect a departure tax of 1,000 baht now. But if the government wants to implement this tax in the future, people should have more information about it to weigh the benefits and disadvantages of this scheme,” said Mr Charoen.
He said the government justification provided with the public hearing questionnaire on needing to balance the tourism trade deficit is irrational. Mr Charoen said Thailand has a tourism trade surplus and always has, with inbound income comprising 70% of the total, compared with 30% of outbound expenditure.
He was referring to the government statement that the departure tax would somehow deter outbound Thais and resident expats, who were “spending too much on overseas trips”.
“In addition, 1,000 baht is too expensive amid current economic conditions,” said Mr Charoen.
Chotechuang Soorangura, vice-president of TTAA, said a development plan should be included with any departure tax so the people who pay it are aware of how the government will spend the revenue.
He said while some countries apply a departure tax, such as Japan, the rate is considered reasonable, at around 250 baht.
Source: https://www.bangkokpost.com/business/2567056/clarifying-departure-levy-scuttlebutt