The State Local Government and Traffic Management Committee chairman said the state is now fine tuning the mechanism of the tax collection with the hotels through the Malaysia Association of Hotels (MAH) Penang Chapter. "The levy will likely be implemented by June or July next year once we finalised the levy rate and the collection mechanism," he said in a press conference after talking about a new parking system which will be implemented on January 1 next year. He added that details such as the hotels amending their bills to charge their guests the tax and the collection of the taxes from the hotels by the council will need to be worked out. "We still have to work out how the councils are collecting the taxes from the hotels, whether monthly, half-yearly or annually," he said. During the tabling of the state budget 2014, Penang Chief Minister Lim Guan Eng had proposed the implementation of taxes at between RM2 and RM5 per hotel room per night from March next year onwards. Lim had noted that about five million room nights were recorded in Penang last year and stated that the revenue collected from the levy will go into a special fund.

Hotels room in Penang will be impose in June 2014. Picture by K.E. Ooi

The fund will be channelled towards developing the state's tourism industry and cultural activities. Chow said the hoteliers, through MAH, had agreed to the levy but they had requested for a review of the earlier proposed levy rates. "We will announce the levy rates once we decide on a rate," he said. Local councils will be collecting the tax from hotels on behalf of the state as allowed under Section 107 (1) of the Local Government Act. "The local councils are the ones granting license and permits to the hotels so under the section, they may prescribe and collect charges for the supervision of the businesses so they are the ones with the authority to collect the levy," he said. The levy, once implemented, will be imposed on a total of 14,700 hotel rooms in  72 star-rated hotels and about 100 non-rated hotels in the state. Chow pointed out that Malacca had imposed a similar levy in the state in 2011. "We hope to be able to collect a few million in revenue from the tax which will go to a special fund for developing the tourism industry," he said.