The tourism, travel and aviation industries are disappointed that the Government is pushing ahead with imposing a travel tax on New Zealanders and international visitors from  1 January 2016.

It was announced that a travel tax of $21.57 (incl. GST) per air passenger and $26.22 (incl. GST) per cruise passenger will be imposed, with the money collected replacing the current Crown funding of border services provided by Customs and Ministry for Primary Industries.

Following the surprise announcement of a travel tax in the May budget, a coalition of tourism, travel and aviation organisations was formed, led by the Tourism Industry Association New Zealand (TIA). In its submission, the Coalition Against Travel Tax (CATT) warned that the tax would be an unwelcome handbrake on growing the visitor economy, and if it was to be imposed, the design, timing and implementation of the Travel Tax needed significant amendment.

TIA Chief Executive Chris Roberts (pictured above) said the tax ignores a long-standing understanding in New Zealand that border services are a public good and should therefore be funded from general taxation. Roberts said the Government has downplayed the potential negative impacts of the tax.

“Fortunately, the tourism sector is currently performing very well, with international visitor arrivals growing by 8% in the past year. However, the new tax will be enough to deter some people from travelling, and could shave 1-2% off the current growth. In terms of visitor spend, New Zealand is set to lose more than it gains in the tax collection. CATT made a number of constructive recommendations regarding the implementation of the tax and it is disappointing that these have not been taken up,” Roberts said.

Roberts said the failure to agree to a Traveller Reference Group is particularly disappointing. He points out that it is directly counter to the Government‘s response to the Productivity Commission’s Report on Regulatory Institutions and Practices. In that response, released in July, the Government promised to “improve regulator cost recovery practices, including providing more information to fee-payers through the use of open-book exercises so feepayers can have input into agency cost structures.”

Roberts said the Government has made two notable concessions, which are welcome. The first is that the tax for cruise passengers has been capped at the consultation figure of $26.22, but with the exempting of crew members, this will not allow full recovery of the border costs incurred. The second is that the level of the travel tax will be set for 30 months, with any adjustment likely to occur on 1 July 2018.