New tax to hit air travellers

By Graeme Kennedy

Friday 5th March 2004

The government is planning to hit airlines with an estimated $50 million in annual costs for international passenger security, Customs and MAF processing.

Travellers will pay the $50 million, with ticket prices rising across the board.

Enabling legislation under the Border Security Bill is now before the House. Deputy Prime Minister Michael Cullen is chairing a ministerial committee to co-ordinate and implement the new pricing regime.

A spokesman for Dr Cullen said a discussion paper on funding passenger clearance services was expected to be released within two weeks.

Passenger screening cost-recovery is included with cargo security measures in the Border Security Bill.

Airlines, still recovering from the industry's worst downturn in history, said they could not absorb the new fees and would have to pass them on to passengers, who could pay up to $20 more to leave the country.

Board of Airline Representatives NZ (Barnz) executive director and Travel and Trade Industry Coalition secretariat Stewart Milne said the proposed tax would have a huge impact on the tourism industry.

"Airlines can always put the extra cost on the ticket but every price increase is totally against what they are trying to do attract more traffic with lower fares."

Mr Milne said the two organisations would fight the tax alongside the campaign against the government's plans to charge exporters, importers and transport operators an extra $20 million for enhanced border security.

He said while airlines gained some benefits from passenger security screening, the entire country benefited from border protection and it should be funded by the Crown.

Government Administration Committee chairwoman Dianne Yates said the Border Security Bill's emphasis was on freight movement but included passenger clearance costs. The bill would empower government to charge fees, which would be set after consultation with industry.

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