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Tourism And Taxes

New Zealand tourism faces GST backlash

Feb 10, 2010

International visitors will pay an extra $20 million in GST if the tax is raised to 15 per cent, and the extra cost will hurt, the tourist industry says.

The Government currently pockets about $800 million a year in GST from international tourists, but the industry warns that visitors' spending itself would be the main casualty of the tax rise.

Chicago-based South Pacific travel specialist Connie Goodman said it would not put tourists off visiting, but they would limit their discretionary spending.

Tourists did not look at taxes to determine their destination, but the total price determined the shape of their trip.

"We look at Fiji and that is 15.5 per cent, and it does not mean people will go to Tahiti to avoid that. The way people see it is – will New Zealand still be value for money?"

Ms Goodman's company, Down Under Endeavours, dealt in the luxury end of the market, but even high-spending tourists would cop a greater increase in fixed costs such as accommodation.

"It's a big chunk of change as part of a package at several thousand dollars a night. It certainly makes a big impact over a 10 day trip."

The likely impact for the high end market was that they might shorten their trip, but she suggested mid-range tourists would look to downgrade aspects of their trip after the increase.

"New Zealand is not like Australia where it is about bums on seats, it is about quality for the tourists. So this [a tax increase] could impact seriously."

Tourism Industry Association chief executive Tim Cossar said the rise effectively knocked prices up by 2.5 per cent for internationals and domestic tourists. It was already expensive to travel to New Zealand, he said.

New Zealand tourism faces GST backlash
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