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NZ tourism sector asks Key to challenge Aussie tax

Tuesday 15th May 2012

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New Zealand's tourism industry lobby has called on Prime Minister John Key to challenge a 17 percent hike in departure taxes in Australia, the nation's biggest source of overseas visitors.

Australia's federal government announced an increase in the departure tax to A$55 from A$47 per person, effective July 1. That means a family of four departing Australia will pay about NZ$280 just to leave the country. The move was unveiled in Treasurer Wayne Swan's budget last week.

"We have asked the prime minister to raise it with his Australian counterpart - and we have had a positive response," said Ann-Marie Johnson, a spokeswoman for the Tourism Industry Association. Tourism operators are "concerned about the impact on the number of Australians coming into New Zealand since they are our biggest market."

The lobbying comes after Key attended the tourism sector's showcase Trenz conference in Queenstown last week, where he flagged New Zealand's distance from major markets as a challenge the government is trying to overcome.

Some 1.17 million Australians made short-term visits to New Zealand in the 12 months ended March 31, a 5.4 percent gain from a year earlier, government figures show. Australian tourists spend an average of $1,500 per person when visiting New Zealand, according to figures from the Ministry of Economic Development. In the March year, Australians spent $1.65 billion on local goods and services.

In his first term as Prime Minister, Key targeted Australian visitors to bolster the local tourism sector, setting up a $5 million joint marketing venture with Air New Zealand in a bid to attract an extra 35,000 visitors from across the ditch.

The Australian tax hike will be keenly felt in New Zealand, according to Auckland International Airport, the country's biggest gateway.

"As the biggest trans-Tasman travel market, New Zealand will be the most vulnerable to this rise," spokesman Richard Llewellyn said. "Tourism taxes risk creating disincentives to travel, thus damaging the significant economic benefit that the visitor industry delivers to residents and businesses."

Last week, national carrier Air New Zealand said it was lifting capacity on flights to Perth, and has increased trans-Tasman capacity 4 percent over the past year.

In December, the British government announced a similar increase in the departure tax for air travelers to New Zealand. The 8 percent increase, which came into effect on April 1 now means it will now cost a family of four just under NZ$800 to leave the UK.

PM Key led unsuccessful efforts to challenge the UK move, which tourist operators said would deter visitors. Since then, some 82,000 Britons visited New Zealand in the three months ended March 31, down 9 percent from the same quarter a year earlier.

The Australian departure tax increase is expected to generate about A$610 million in extra revenue over four years for the Australian government, according to details of the plan announced with the federal budget last week.

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