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Australian, NZ tourism groups vow to challenge departure tax

Thursday 17th May 2012

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Australia’s tourism lobby groups are getting in behind a challenge to that nation’s 17 percent hike in departure tax, which may squeeze New Zealand’s biggest source of 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 should be working together to grow the tourism industries on both sides of the Tasman - the PMC is a tax on tourism which unfairly and disproportionately impacts leisure visitors to Australia from our nearest neighbour, " John Lee, chief executive at Tourism and Transport Australia said in a statement. "Imposing additional cost is not the way to grow international visitation in either direction and we simply don't believe the increase is justified."

The lobbying comes after Prime Minister John 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.

The Australian tax hike will be keenly felt in New Zealand, according to the Tourism Industry Association of New Zealand.

“We have asked the prime minister to raise it with his Australian counterpart – and we have had a positive response,” Ann-Marie Johnson, a spokeswoman for the association told BusinessDesk earlier this week.

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 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.

The tax increase was designed to cover the cost of passenger processing at Australia's airports.

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