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TAX NEWS - June 2010

Travel Tax threatens New Zealand tourism

The New Zealand tourism industry faces a new threat in the form of cash-strapped governments taking the easy way out by taxing international air travellers.

The Tourism Industry Association New Zealand (TIA) and the Inbound Tour Operators Council (ITOC) are worried that other governments will follow moves by Germany and Britain to increase taxes on travellers.

The German government recently announced plans to impose a departure tax on all travellers leaving German airports.

This follows increases to the British Air Passenger Duty levied on passengers departing United Kingdom airports.

The new British government has pledged to replace the air passenger duty but it will impose a per-plane duty instead.

"Of real concern is the possibility that other governments around the world, especially in our major Asian markets, may follow suit, increasing the cost of travelling to New Zealand for their citizens," TIA chief executive Tim Cossar said.

Although both the German and British governments claimed the taxes were to combat climate change, there was no evidence to show the money would go into environmental projects.

"We agree with International Air Transport Association (IATA) director general and chief executive Giovanni Bisignani who described the German proposal as 'a cash-grab by a cash-strapped government'."

ITOC chief executive Paul Yeo said the taxes were a knee-jerk reaction to European economic difficulties.

"Airfare increases will leave travellers with less money in their pockets when they arrive in New Zealand. German visitor numbers to New Zealand have grown nearly 4 percent in the last year and they are among our biggest spending markets, adding $269 million to our economy a year. We don't want to see barriers placed in their way," Mr Yeo said.
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