Thailand travel tax must jump hurdles

BANGKOK, 29 May 2019: Within six months Thailand is promising to introduce a travel tax that will fund accident insurance and finance restoration of tourist attractions and the environment.  Sounds good.

A talking topic for years, this time round some progress has been achieved. New legislation written in the Tourism Act allows the Ministry of Tourism and Sports to collect and manage the levy and the start-up date is 1 October (start of the government’s fiscal year).

The changes to the law came into effect on 20 May. Now, the panic button has been pressed.  A workable package and collection process needs to be hammered out and fast.

As for the challenges, the government and research partner, Naresuan University, has just six months to conduct a survey and put in place a mechanism to collect the tax.

Naresuan’s survey team will have to check out all the worldwide examples of successful travel tax schemes. There are hundreds and they all have various objectives from fighting ‘overtourism’ to simply lining the pockets of a territory’s ruler.

Take your pick from the selection and then give it a local twist to please the electorate such as suggesting the funds will save the environment and critics are likely to be silenced.

The guessing game on the actual levy is hovering optimistically over the THB100 fee button, paid by all tourists entering the country.  A ballpark estimate says that would reap THB3,800 million for the ministry coffers.

The problem with that simple equation is the credibility of the count. Are there really 38 million tourists, or do we mean a head count at the turnstile?

If it is the latter there could be calls for politically correct exceptions. For starters do we really want to take THB100 every time a Lao trader crosses the border to sell their wares in Thailand?

Then there are the thousands of foreigners who work in Thailand or stay on retirement or other long-stay visas. They are also required to cough up proof of expensive insurance cover so would they be exempt?

The complications are many and not least the collection process emerges as one potential headache. The easiest payment channel for the new tax would be to add it to the taxes and surcharges collected at the air ticket point-of-sale. But that leaves out the overland traveller.

Once you introduce a travel tax payment at an overland border the cost of collection soars to the point it is hardly worth the bother. We can also envisage the potential temptation that an overflowing cash box presents at an overland border checkpoint when the office closes. A hand could easily dip into the box for daily support of environmental needs in the local community. A digital payment could cut the cashbox contents, but then not everyone has a digital wallet.

In the past, schemes to collect a travel tax did not sit well with Thai travellers. The Ministry of Finance collected THB1,000 the 1980s to discourage Thais from travelling overseas. It didn’t work and eventually, the ministry recognised the collection cost, which included booths staffed by ministry officials at all airports was just too expensive. There was also talk of a hand dipping into the till.

Obviously, the least problematic channel recruits international airlines to collect the fee at the point-of-sale on all ticketing to Thai destinations. That might cut the potential tax audience from around 38 million to an estimated 25 million?

Still, it’s a tidy sum to cover accident insurance and fund environmental projects.  Hopefully, it will also help to eliminate the annual THB300 million in unpaid hospital bills. Possibly tourists short of cash hop out of their sick beds and flee the scene. Even on crutches, they manage a remarkable turn of speed.

While foreign tourists might welcome accident cover they should recognise the insurance would probably not extend to expensive private hospitals.

So the argument that the new tax is a cure-all measure is not exactly correct.  Yes, it would cover accidents but might not extend to activities considered risky such as riding a motorcycle.  Even less risky activities such as para gliding, climbing or jumping off cliffs, zipline flights and scuba diving would need additional insurance cover.

There is not the slightest hint that travel companies would be able to throw away their insurance cover for foreign guests buying tour packages.  That clearly falls outside of the brief.

So just what is the bottom line on the new legislation?

A travel tax is on the way. Travellers should not take this to mean they can skip buying travel insurance before they depart for Thailand.  The tax will provide accident cover possibly limited to government hospitals and a flat payment to the nearest relative if the accident is fatal.

Travel firms will still need to take out insurance to cover for their guests during a tour, which is a basic requirement that foreign tour operators demand.

1 COMMENT

  1. Yes, Don, you are absolutely spot on with your analysis.

    Just another ill-thought out half-assed scheme thought up by a greedy bureaucrat in his lunch break, without any analysis, planning, thought on the impact on tourism, etc.

    This Is Thailand!

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