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Som Tam’s Rice Bowl? A look at Thai tourism this week by Andrew J Wood

October 29, 2013 Destination Thailand, Headline News No Comments Email Email
egtmedia59It has certainly been an interesting week in Thailand with discussions on tourism taxes and the ongoing challenges of handling millions of inbound Chinese tourists. 
The week started with an announcement from the Ministry of Public Health that tourists would be taxed on arrival in Thailand Bt 500. Why the Health Ministry is raising taxes for tourists without the approval of the Ministry of Tourism and Sport and the Tourism Authority of Thailand is not fully understood.
Not surprisingly the announcement of a new tourist tax was not well received by tourism bodies and made news in publications around the globe, even the UK’s Daily Mail ran a feature on the new travel tax and the TAT were prompted to put out a press release saying that the tax was still under discussion.image
It soon became evident that the reason that the health ministry were hoping to raise taxes from tourist was to pay for the annual cost of providing medical care for tourists without insurance of Bt 200 million.
Of course the big question being asked was who is going to collect this huge amount of money from 28m tourists, approximately Bt 14,000,000,000?
Would tourists have to put their hand in their pocket when they arrive at the airport?
This would be unpopular and taxes raised in this way are notorious for being very expensive to administer. The physical cost of collecting the money and the wages for the staff needed to do so, the renting of space at the airport and security staff to transport the money, all contribute to the cost. Of course handling such a large amount of cash also raises questions of transparency and how exactly the money will be used? We hope it would stay within the tourism industry and be reinvested into infrastructure including public transport and tourism staff training.
Britain’s Daily Mail in their recent coverage commented that TAT UK were quoted as saying a ‘tourist tax’ was one of several ideas that the Ministry of Health and the Ministry of Tourism & Sport were considering, according to Joanna Cooke, UK spokesperson for the Tourism Authority.

“Unpaid medical bills, left by visitors staying in Thailand without correct travel insurance, are putting a strain on Thai hospitals. The Thai government currently absorbs this cost at circa 200 million baht [£4million] per year.”

The highly regarded Thailand-based journalist Mr. Don Ross in his TTR report had the following to say about the new tax, “travel executives would prefer to call it a silly season tax. No matter how you view it the proposal is bizarre, unworkable and probably unprecedented in global tourism, a direct antithesis of the Public Health Minister’s claims.”
As if the arrival tax wasn’t enough in the same week the Airports of Thailand (AoT) also announced that they will be raising departure taxes for passengers using their airports. Raising fees for both domestic and international passengers by Bt 100 per person.
Commenting on this TTR also reported that the new rates will be submitted to the Civil Aviation Committee for endorsement before final approval by the Ministry of Transport. AoT in their announcement said raising the passenger service charge (PSC) was necessary as the actual costs involved had risen to Bt 336 per domestic passenger, Bt 236 higher than the revenue per head collected.

AoT gave no details on how the AoT calculates “cost involved”.

TTR’s Ross asks if the AoT is  referring to a calculation based on direct passenger handling costs, or has it included other expenses such as use of air-conditioning, utilities and services and the cost of immigration checks?

Most of the expenses incurred in handling passengers are absorbed by airlines that pay substantial fees for baggage handling, office space, utilities and a host of gate and counter services including transfer buggies to the gate and services for disabled passengers.

Tour operators, TTR went on to say, pay a Bt 50 per head fee to AoT for every passenger they meet-and-greet and transport operators pay for the right to offer car rental, taxis and limousine services.

“It is not clear what costs the AoT actually incurs because passengers are on its premises. Passengers pay a premium for every service available at AoT airports – about 60% over the odds on food and beverage. Toilets are free,” quipped Mr. Ross.

With all the talk of raising taxes, travel executives were heard referring to the goose and the golden egg and the danger of raising taxes too high.
The World Travel and Tourism Council (WTCC) reports are highly respected and used by many executives as reference data for planning. The WTCC produce annual reports for countries and help government’s identify the importance of travel and tourism in reference to overall GNP. The reports also help to quantify that travel and tourism is a significant employer. For Thailand the total contribution of Travel & Tourism to GDP was Bt 1,897b (16.7% of GDP) in 2012, and is forecast to rise by 7.4% in 2013, and to rise by 6.5% pa to Bt 3,833b by 2023. Travel & Tourism directly supported 2,020,000 jobs  (5.2% of total employment). This is expected to rise by 10.1% in 2013 and rise by 4.5% pa to 3,465,000 jobs (8.1% of total employment) in 2023.
Further in 2012 the contribution of Travel & Tourism, including jobs indirectly supported by the industry, was 12.4% of total employment (4,818,500 jobs). This is expected to rise by 9.4% in 2013 to 5,273,000 jobs and rise by 3.6% pa to 7,528,000 jobs in 2023 (17.5% of total).
Let’s not kill the goose.
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I was very pleased to see the report that came out of China concerning the bilateral discussions on visa free travel for Chinese and Thai tourists.
The reciprocal tourist-visa waiver between China and Thailand is stalled and is unlikely to materialise anytime soon.
At a press conference on the sidelines of the 15th China International Travel Mart (CITM) Thai Tourism and Sports Minister Somsak Pureesrisak said the Kingdom would need some time to strengthen security measures and develop infrastructure to serve the jump in visitor numbers that a waiver would bring.
The government is afraid that if the visa waiver for the Chinese is done without preparation, it could create problems.
So the Thai government are listening to many of the comments that are coming from the private sector and I’m pleased to see that they are not just going out to get numbers. They are also considering the cost to the environment and the negative perception by the local population that such a heavy arrival from any one country can create.
China is now the biggest source of tourists to Thailand, with about 3.7 million Chinese visiting in the first nine months of 2013, up 90 per cent. This year, the number is expected to be 4.2 million, rising to 6.09 next year.
Written by : Andrew J Wood

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