Tourist tax perk nearing expiry
The deduction for travel to less- visited areas will need an extension within three months to continue, but some are seeking additional measures to bring benefits to low-income towns and communities. By Suchat Sritama
With less than three months left for the tax scheme to encourage more people to visit second-tier provinces, the government and stakeholders are mulling the possibility of extending the programme for another year to ensure benefit to all 55 provinces.
More cooperation and marketing strategies between private and public agencies are needed to solve existing weak points such as poor management in tourism involving rural, less-visited attractions in each province and a lack of technology such as online booking for these areas.
Tourism authorities and stakeholders have agreed on a scheme extension, but they have urged locals to create catchy attractions and offer weekday packages in a bid to share in the tourism boom.
More new measures will be highlighted, such as promoting local stories and cultural heritage in secondary provinces, local food and gastronomy, and local trails and unspoiled routes.
If the three measurements get endorsed, hundreds of local communities and their villagers should gain business from higher traffic.
Over the past five decades, about 10 major cities in Thailand have enjoyed the full benefit of tourism growth. Most local and international tourists travel to popular places such as Bangkok, Phuket, Pattaya, Koh Samui and Chiang Mai, while many other provinces nationwide are still lacking in opportunities.
In a bid to increase tourism income in smaller provinces, the government has approved tax breaks for tourism spending in 55 second-tier provinces, or those that welcome fewer than 4 million tourists a year.
Effective from Jan 1 to Dec 31, 2018, the tax incentives allow individual taxpayers to deduct the value of travel expenses in these 55 provinces for accommodation, food and drinks of up to 15,000 baht from personal income tax.
As well, corporations that organise seminars and meetings at these secondary locations are eligible for the tax scheme.
The Tourism and Sports Ministry hopes the scheme will help increase the number of visitors to small cities by more than 10 million this year. Last year, Thais made 152 million trips to either major or secondary provinces, generating 930 billion baht tourism revenue.
After six months of the tax scheme, about 40 million tourists visited second-tier provinces, up 5% year-on-year and generating 116 billion baht in tourism income, up 9% year-on-year.
The ministry estimates that revenue will reach 250 billion baht from 80-90 million visitors.
The number of foreign tourists this year is estimated at 37-38 million, generating 2.1 trillion baht in tourism revenue.
TAX BREAK EXTENSION
Yuthasak Supasorn, governor of the Tourism Authority of Thailand (TAT), said the tourist tax incentive is one of the most effective measures to help strengthen and reinforce domestic tourism and should be extended for the coming year.
In 2017, more than 20,000 tourists participating in the scheme claimed a total tax deduction of 2 billion baht. But the scheme was opened more broadly for expenses in all provinces, not just small towns.
Mr Yuthasak expects the number of participating tourists to increase this year, thanks to heavy promotion from all agencies involved.
But he said the impact of tourist tax breaks remains minimal when compared with other government campaigns such as Shop Chuay Chart or the tax refund for shopping during the New Year season, which lasts for a short period but has a greater impact on domestic consumption.
In order to make the tax deduction more effective, authorities should improve the tax refund system and provide more convenience to tourists, similarly to a model used in Japan, Mr Yuthasak said.
The government under Prime Minister Prayut Chan-o-cha is also promoting tourism to win the hearts of locals.
Yesterday, the premier kicked off a tourism campaign in Lamphun in the North. Called “Thai Teaw Thai, Thai Yang Yuen” (Travel Thailand, Sustainable Thailand), the plan is to drive tourism in small provinces.
The campaign is part of the collaboration by state agencies led by the TAT and flag carrier Thai Airways International (THAI), which plans to offer 20 tour programmes from Oct 1 to Dec 31.
THAI Smile, a budget airline under THAI, is offering special tour programmes on several routes that allow people to visit second-tier provinces easily.
Meanwhile, the TAT is offering the Local Link initiative to improve the ratio of domestic and foreign visitors to main cities versus second-tier cities from the current 70:30 to 65:35 by the end of the year.
“The initiative is also a reminder for Thais and local businesses to take advantage of the government’s tax deduction measures,” Mr Yuthasak said. “It encourages them to hold seminars and business events or take leisure travel in second-tier cities for the rest of this year.”
CALL FOR BETTER SYSTEM
Supamit Kitjapipat, chief executive of Siripanna Villa Resort and Spa Chiang Mai, said that if the government extends the tax deduction it will help boost traffic into secondary provinces but not all areas.
He said only the provinces with good infrastructure will benefit from the measure, while provinces lacking good infrastructure and tourism facilities may lose out on the opportunity.
“Poor infrastructure will not attract tourists,” Mr Supamit said. “For example, many senior tourists will not travel into remote areas and be inconvenienced, so operators like hotels and restaurant will have no business.”
He urged the government to improve infrastructure before promoting secondary provinces and relying on the tax scheme.
Neoh Kean Moon, general manager of Dusit Thani Pattaya, said four- and five-star hotels in the provinces are unable to receive a benefit from the tax deduction because high-end customers are unconcerned about the tax issue. Instead, small business will have more opportunity.
In his view, good tourism campaigns will help drive tourism business much more than tax breaks for travel to second-tier provinces.