Hotels move to block provincial tax

PHUKET: The Phuket Tourism Association (PTA) and the island’s Provincial Administration Organization (OrBorJor) appeared today to be on a collision course over a proposed new tax on hotel rooms. According to the Provincial Administration Organization Act of 1997, any OrBorJor may collect a tax equivalent to as much as 5% of room revenue from all forms of accommodation in its province. The PTA, however, argues that the Act contradicts the Thai Constitution, and that the Phuket OrBorJor therefore has no right to collect the hotel tax, an argument it put to the Provincial Governor, Charnchai Soontharamut, at his office this morning. A similar fight between the Koh Pa-ngan Municipality and the Surat Thani OrBorJor is already before the Constitutional Court, which is being asked to rule whether the OrBorJor Act clashes with the Constitution. “We’ve come to meet the Governor today because we want to delay the tax collecting process [during the hearing in the Constitutional Court],” explained Sombat Atiset, managing director of the Kata Thani Hotel & Beach Resort and the newly elected president of the PTA. Before 1997, the OrBorJor had authority only in areas outside the Municipality. That area shrank further in 1996, when the Tambon Administration Councils (OrBorTor) were set up. When the OrBorJor Act was passed the following year, however, it gave the OrBorJor authority over the whole province. This, the opponents of the hotel tax argue, is where the problem lies, because the Constitution states that there shall be no overlapping of authority between local government bodies. The OrBorJor Act should therefore be rescinded, the opponents argue, which would leave the hotel tax dead in the water. “I have to discuss the issue with the Governor, members of the OrBorJor, the PTA, and the Thai Hotel Association, Southern Chapter,” said Dr Prasit Koysiripong, president of the OrBorJor. “Nevertheless,” he added, “we will try to start collecting the hotel tax by October 1.” Asked about the tax rate, Dr Prasit said that it “has to satisfy every party”. Until recently, there were indications that the tax rate for Phuket would be set between 0.5% and 0.8%, a level that the PTA appeared ready to accept. Sources told the Gazette that the matter was discussed at a recent meeting of the Federation of OrBorJor in Southern Thailand. Dr Prasit, as president of the OrBorJor in the region’s leading tourism center, came under pressure to set the tax rate at a much higher 2%. The OrBorJor is already levying tax on fuel and tobacco. Vendors of these two commodities have been able to pass the additional cost on to consumers immediately. But this is not the case with many of the hotels, which have already pre-sold blocks of rooms for the coming high season to tour wholesalers at contracted prices, and will therefore not be able to pass the tax on to their guests.