Sunday, December 15

4PAM questions need for departure levy

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The departure levy was first announced during last year’s Budget 2019 as a new form of tax that will be charged to travellers flying out of Malaysia.

KUCHING: The Public Transport Users Association (4PAM) questions the need for the Malaysian government to impose the departure levy on the back of various existing taxes being paid which may hamper the tourism industry.

Ajit Johl

President Ajit Johl queried on what the departure levy collection will be utilised for, seeing as how passengers are already paying various forms of taxes when buying airplane tickets.

Malaysia currently imposes several taxes and charges on passengers travelling by air, including the Passenger Service Charge (PSC) on domestic and international air transport; the Regulatory Service Charge (RSC) on domestic and international air transport; and the Service Tax on domestic air transport.

“From what we are told, the government is expected to rake in RM700 to RM800 million from this levy. What is it going to be used for?” he said in an interview with The Borneo Post.

“It cannot be used for airport management; they already have the PSC for that. It cannot be used to fund Mavcom (the Malaysian Aviation Commission) because Mavcom is also charging you money (via the (RSC).

“If it is being used for government expenses, the average user is also paying income tax. Users buying tickets are already being charged with Service Tax. So, what are we being taxed (with this levy) for? How is it going to be managed and collected?” he asked.

To note, the departure levy was first announced during last year’s Budget 2019 as a new form of tax that will be charged to travellers flying out of Malaysia.

Based on the Federal Government Gazette on July 31, 2019, the departure levy will now be imposed on Sept 1, 2019 on any person that leaves Malaysia. The rates will be based on the seat class and destination.

For those flying economy from Malaysia to other Association of Southeast Asian Nations (Asean) member states, they will have to pay a levy of RM8. Those travelling on other flight classes to Asean will pay RM50.

For flights beyond Asean, those travelling on economy class will have to fork out RM20. Passengers in other flight classes will be charged RM150.

The departure levy will not be imposed on infants and toddlers below 24 months old. Passengers transiting via Malaysia – with a transit period not exceeding 12 hours – will also be exempted.

“This departure levy will definitely make tourists think twice before deciding to come to Malaysia,” Ajit added.

This call tallies with the one made by the International Air Transport Association (IATA) last December, noting that air passengers are already paying for the aviation services they utilise and should not be forced to remit more than their fair share in tax receipts with the introduction of the levy.

“It should be highlighted that airlines and airports/airport authorities are required to adhere to the provisions of the respective agreements they have entered into, including the payment of passenger-related charges by airlines.

“In the event of non-payment or underpayment of these passenger charges, the airport/airport authority should take the necessary means to ensure payment in line with the commercial agreements they have concluded and not seek to recover under-remitted amounts by alternative fiscal means, such as through revenues generated by the Air Passenger Departure Levy.

“Moreover, Malaysia already introduced the Tourism Tax in September 2017 on accommodations provided to foreign tourists at a rate of RM10 per room night. As a significant number of foreign tourists travel to/from Malaysia by air, the imposition of the proposed Air Passenger Departure Levy would be duplicative and subject only tourists travelling by air (and not other modes of transport) to unfair and inefficient double taxation.

“Without adherence to the various ICAO principles, international aviation would become financially overburdened by excessive and unjust taxation, which in turn would significantly limit the economic and social benefits generated by air transport.”