How can SST increases impact affordable hotel stays for B40 groups?

Question

Accepted Answer

Sales and Services Tax (SST) Increases Impact on Affordable Stays for B40 Groups

The Sales and Services Tax (SST) can make licensed budget hotel stays more expensive for customers, particularly impacting those in the B40 income group, by increasing the final price of rooms. This occurs because the 6 per cent SST is applied to the room rate, meaning higher room prices result in a greater tax amount. The Malaysian Budget and Business Hotel Association (MYBHA) has highlighted that this tax burden can deter customers, especially those from the B40 segment who are seeking affordable accommodation options.
Impact of SST on Budget Hotel Pricing

The standard Sales and Services Tax (SST) rate for the hospitality industry is 6 per cent. For instance, a hotel room priced at RM100 would incur an additional RM6 in SST, bringing the total cost to RM106. This tax is applied regardless of the room's base rate. Consequently, licensed budget hotels, even when offering competitive room rates similar to unlicensed operators, become less attractive to potential guests due to the added tax.
Competitive Disadvantage Against Unlicensed Operators

Unlicensed accommodation providers, who do not collect or remit taxes like SST, often present a lower overall price to consumers. This creates a significant competitive disadvantage for licensed budget hotels. While the base room rates might be comparable, the imposition of SST on licensed establishments makes their offerings appear more expensive. This price difference can lead customers, including those from the B40 group, to opt for unlicensed alternatives to save money.
Proposal to Increase SST Threshold

To alleviate the financial pressure on both budget hotel operators and consumers, particularly the B40 group, the MYBHA has proposed an increase in the SST annual threshold for the hospitality industry. Currently set at RM500,000, the association hopes to see this raised to RM1.5 million through Budget 2024. Such an adjustment would allow a greater number of licensed budget hotels to operate below the SST threshold, potentially enabling them to offer more affordable rates and remain competitive.
Affordability for B40 Consumers

An increased SST threshold is expected to directly benefit customers, especially those within the B40 income bracket. By allowing more licensed establishments to fall below the tax threshold, the overall cost of accommodation can be reduced. This would ensure that individuals and families in the B40 group can access reasonably priced rooms without the added burden of SST, thereby promoting more accessible and affordable travel and lodging options.

Reading history

Hide →

This history is cleared when the page is closed.

How can SST increases impact affordable hotel stays for B40 groups?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends