Hotels calling for better tax treatment
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Hotels calling for better tax treatment

Calculation should be revised, say hoteliers

A hotel group offers special deals to local travellers at a recent edition of a major travel fair held in Bangkok. (Photo: Somchai Poomlard)
A hotel group offers special deals to local travellers at a recent edition of a major travel fair held in Bangkok. (Photo: Somchai Poomlard)

Hoteliers are urging a revision of the property tax calculation based on the land appraisal price and business income to ease the uneven recovery in the hospitality industry.

Thienprasit Chaiyapatranun, president of the Thai Hotels Association (THA), said the land and building tax remains an obstacle for hotel operators as the full rate is set to be collected this year, following a 15% discount in 2023 and 90% reduction during the pandemic.

The current rate is calculated based on the land appraisal price, which he said is unfair as some hotels cannot earn the same revenue as before the pandemic, or have yet to fully resume operations despite higher fixed costs.

Mr Thienprasit said the rationale of the land tax is reasonable, aiming to maximise land usage by encouraging landlords to reap benefits from vacant plots to avoid a high tax levy.

However, he said this scheme is not feasible for hotels, as small and large hotels in the same location pay the same rate, though their earnings vary greatly.

In addition, licensed hotels pay a higher tax amount than illegal hotels, which avoid the hotel tax, said Mr Thienprasit.

He said the government should opt for a hybrid model, taking earnings into calculation, not only the land appraisal price.

La-iad Bungsrithong, a THA board advisor, said that with the land tax collection and 400-baht minimum wage, Chiang Mai hotels will incur a higher burden than prime tourism provinces such as Bangkok and Phuket due to slower recovery.

Although the land appraisal price in Chiang Mai is lower than that of Bangkok, operators still have to struggle with revenue management due to unrecovered air traffic, slow bookings during low season, and negative tourism sentiment due to the PM2.5 smog, restricting tourism income.

Likewise, the sudden plan to increase the minimum wage to 400 baht nationwide will push up hotel operation costs by 14-15%, as hotel operators have to increase salaries across all jobs for fair practice, not only the low-ranking positions.

Mrs La-iad said employers would need time to adjust their employment structure and adopt technology or train staff to work in multiple roles.

If most hotels cannot cope with rising costs, more layoffs will be seen in the future.

She said elevating workers' quality of life is a good initiative, but the government should also help by lowering other expenses as well, such as energy prices.

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