KUALA LUMPUR (Aug 14): The Malaysian Association of Tour and Travel Agents (MATTA) urged the government to exempt the 6% service tax on all domestic air tickets to ensure other states in Malaysia will also appeal to tourists as holiday destinations.
In a statement, MATTA President Datuk Tan Kok Liang said this exemption would allow the government to collect much more Sales and Services Tax (SST) from higher spending on other goods and services and benefit the states and the country’s economy.
He said tourists bound for Sabah and Sarawak were complaining of high air fares from Kuala Lumpur.
“The high costs of air travel especially between the Peninsular and Sabah and Sarawak have driven Malaysians to opt for regional travel instead of local holidays.
“Adding the six per cent service tax on domestic flights would be a disincentive for ‘flying local’. How are we to develop smaller towns and states apart from Kuala Lumpur as tourism hubs?” he asked.
MATTA’s appeal for exemption is in response to Finance Minister Lim Guan Eng’s statement that the government is open to receiving public feedback on the SST.
Tan said domestic tourism is one of the key anchors in the tourism industry and was expected to continue its growth trajectory, with inbound tourism receipts amounting to RM82.1 billion last year and domestic tourism RM83.1 billion.
“The potential of collecting SST from the entire tourism industry is huge, whereas domestic air tickets constitute only a tiny fraction.
“Imposing a service tax on domestic tickets could discourage price sensitive tourists from travelling within the country,” he added. — Bernama