Gov mediates in spa tax dispute

PHUKET: Phuket Governor Udomsak Usawarangkura has agreed to ask the Finance Ministry to review the controversial 10% excise tax on spas, following a meeting on the issue held at his office this morning.

Gov Udomsak chaired the meeting, which was attended by Phuket Spa Business Club Chaiman Pakin Raktae-Ngam, who is leading the opposition to the tax, and Supatra Horsrisumpun, Chief of the Phuket Area Excise Office, which is responsible for collecting it.

Also in attendance was Dr Wanchai Sattayawuthipong, Chief of Phuket Provincial Health Office, and a handful of other officials.

After listening to viewpoints from all sides, the Governor said he would ask Finance Minister Somkid Jatusripitak to review the controversial tax next week.

“I will point out the difference between massage parlors and spas. The raison d’etre of spas is to improve the customer’s health, and this is why spas are being promoted under the Government’s “Health Capital of Asia” tourism promotion scheme.

“The tax should be kept low to allow us to compete with the spa industries in neighboring countries,” the Governor said.

K. Pakin pointed out that spas are already subject to 8% tax on income, 7% Value Added Tax (VAT) and a 1% “local administration charge”.

“If the spas have to pay the 10% excise tax, this will raise the total to 18%. Such a high tax will have a negative impact on the spa business,” he argued.

K. Supatra said she was only following Finance Ministry regulations in collecting the tax, adding that, if spas succeed in being exempted, she would no longer have to collect it.

But, she said, “My duty is based on the law,” a point she emphasized by noting that the tax had gone into effect on January 28, 2003 and stating that she would be obliged to pursue the many spas that have refused to pay for back taxes – whatever the Finance Ministry decides.