“Tax the tourist” seems to be the theme of 2016. Yes, tourism is booming but are we in danger of killing the goose that lays the golden egg?
On 1 January 2016 the new border clearance levy came into force, with travellers each paying $22 per international trip to fund the border services provided by Customs and Ministry of Primary Industries - services previously paid for by the Government. This border tax is going to rake in around $100m a year.
Since then lots of other people have thought “we’d like a bit of that’’. So, ideas have been floated to tax visitors to fund regional tourism marketing initiatives, to pay for roads, toilets, carparks and other public infrastructure, to fund the Department of Conservation, to go towards cleaning up rivers and so on.
Now we have the Green Party supported by Labour suggesting a border tax to fund two recent Government initiatives - Predator-Free New Zealand and the Mid-Sized Tourism Facilities Fund.
TIA agrees that these are good initiatives and that both will need more funding than currently allocated.
However, creating a new tax is rarely the best answer to a funding issue. And getting rid of pests and predators from our home is our problem and our responsibility, not the responsibility of our temporary guests.
This debate about taxing the visitor is overlooking a key point - our international visitors are already heavily taxed.
For starters, they pay over one billion dollars a year in GST – and with the international visitor spend up 25% in the last year, the Government has collected a GST bonanza. Our visitors also contribute in other ways; like the tens of millions of dollars they pay towards our transport network through petrol taxes.
At the same time the Government is spending less on services for visitors than it was a year ago, with the money it is saving by no longer funding border services outweighing small increases for Tourism New Zealand and the new Facilities Fund. No-one is doing better out of the tourism boom than Central Government.
Compared to where we had been tracking, the tourism boom in the past two years has added around $7 BILLION in additional economic activity in New Zealand. Visitors are absolutely paying their way – and then some.
TIA recognises that there are some challenges we need to meet as a country to manage and maximise the benefits of tourism. This includes the issues of seasonality, regional dispersal, long term sustainability and infrastructure capacity.
TIA is undertaking an ambitious project to assess tourism infrastructure needs across New Zealand, where the significant concerns are and what might be the barriers to addressing those concerns. Separately, several tourism industry players are funding a major international study to look at how other countries have responded to tourism growth and what might work best in a New Zealand context.
Both these important pieces of work will be completed in a few months and will enable a well-informed discussion to be held with Government and others. In the meantime, let’s hold off on any more bright ideas about taxes!
