Phuket Weighs Tripling Hotel Tax to Fund Tourism Push

Authorities in Phuket are considering raising the provincial hotel tax from 1% to 3% of room rates in order to bring in more money for local development and tourism promotion. The island is one of Thailand’s most popular destinations for foreign visitors, including Israelis, and officials say the goal is to attract more tourists, not fewer.

Outgoing Phuket governor Nirat Phongsitthaworn said the law already allows provinces to levy local development taxes of up to 3% on hotels. He said the increase could add about 1 billion baht a year to provincial revenue, and as much as 1.5 billion baht if unregistered hotels are also brought into the system. In nearby Phang Nga province, the hotel tax rate is 2%, and the charge is usually included in the room price shown to guests.

Phuket currently relies mainly on hotels, tourism and restaurants for revenue. Phongsitthaworn said some of the tax money is used to promote the island at trade fairs and in overseas marketing, and that a higher rate would let the province expand those efforts. He said that with the extra income, Phuket could work toward its target of 14 million tourists a year, up from about 11 million last year.

He added that the collection department would monitor the issue to make sure all taxes are paid, without requiring any change to the law. “If we receive 4-5 billion baht a year from hotels for development, we can develop Phuket,” he said.