(May 12): The levy collection from hotels in Penang by the state government, which started last year, is illegal, the Barisan Nasional opposition said today.

Opposition leader Datuk Jahara Hamid (BN-Teluk Air Tawar) said the Penang government had no authority to collect any taxes without the approval of the federal government.

She said this was stated in the state constitution.

"Under Part III, Section 28, it says that no taxation shall be collected by the state unless it is authorised by the law," she told a press conference at the opposition leader's office in the state legislative assembly building.

Jahara said before collecting the levy, the state government needed to first table a proposal to the federal government before implementing the policy.

The state government announced that it was going to collect the levy in its 2014 state budget in November 2013. The funds collected would be used for tourism development.

The policy was implemented from June 2014 onwards. Under the policy, RM2 to RM3 per hotel room per night was charged as levy at all hotels rated one star and above.

The state is said to have collected the levy from more than five million room nights from all hotels in Penang.

Jahara also asked whether the room tax was a levy or a fee.

"In the budget speech, it was announced as a levy, which is a form of taxation, but in a reply to BN's Sungai Acheh rep Datuk Mahmud Zakaria's oral question, they called it a fee.

"So which is correct?" she said, arguing that if it was a levy, the state would need to have it legalised. – The Malaysian Insider