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TAX NEWS - June 2010

NZ Tax: Euro travel tax could hit NZ tourism

Moves by cash-strapped governments to raise money by taxing international air travellers could cost this country in one of its key tourism markets.

The German government has announced plans to impose a departure tax on all travellers leaving German airports in a bid to combat climate change - a move which will leave travellers with less spending money when in New Zealand.

The German market pumps $269 million into our economy each year and is our ninth largest spending market.

In the year end December 2009, there were 64,564 German visitors up 3.6 per cent from 2008.

The Tourism Industry Association of New Zealand (TIA) and Inbound Tour Operators Council (ITOC) say the taxes will threaten the New Zealand tourism's recovery and are a kneejerk reaction to European economic difficulties.

The tax is expected to add 10 to 15 euros to the price of an airline ticket.

"We agree with the International Air Transport Association director general and CEO Giovanni Bisignani who described the German proposal as a "cash-grab" by a cash-strapped government," TIA chief executive Tim Cossar said.

Tourism New Zealand says visitor numbers from Germany have grown nearly 4 per cent in the last year.

"We don't want to see barriers placed in their way," ITOC's chief executive Paul Yeo said.

Of real concern was the possibility that other governments around the world, especially in the major Asian markets, may follow suit, increasing the cost of tickets and delaying a recovery of the tourism industry.

The Netherlands imposed a similar tax in 2008, but abandoned the idea after one year.

Other European countries that have introduced or raised departure taxes in the last three years include Belgium, Ireland the UK.

International media reports suggest the plan might cost the airline industry one billion euros.

The Tourism industry said it, together with the ITOC and other industry representatives, have met with government officials to discuss how New Zealand can minimise the impact the taxes will have on the travelling public.

International media reports suggest the tax could cost the airline industry one billion euro a year and there have been warnings that air traffic in Germany could drop by up to three per cent as a result.
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