New Zealand and Australia to fight British “money grab”


Letters from Prime Minister John Key on long-haul travel taxes have been ignored for more than a year by British counterpart Gordon Brown, and the tourism industry is gearing up to fight them.

The taxes imposed by Britain on outbound passenger flights are a major threat to New Zealand’s tourism trade, and the industry is joining forces with Australia to fight any spread of the practice.

Tourism Industry Association chief executive Tim Cossar said 2010 was going to see a battle akin to David and Goliath over the air taxes, but New Zealand would be only one of the losers in any spread of long-haul travel taxes in Europe.

The taxes, to add $240 to the cost of a ticket from this year, were originally touted as a direct attempt to mitigate carbon emissions, but Mr Key, also the tourism minister, said that was rubbish.

“Even Britain has now admitted this is a revenue-collecting device, not one aimed at climate change. It would be a ridiculous tax to impose given there are a number of ways to deal with this issue.”

Air New Zealand chief executive Rob Fyfe has described the tax as a “money grab”.

There had been extensive dialogue between ministers in both governments since the charges were announced in 2008, including personal letters between Mr Key and Mr Brown.

“I’ve discussed [the point] with Gordon Brown on a number of occasions and it is disappointing we are not making progress,” Mr Key said.

“I was hopeful we would, given the strength of our argument and the fact we have refuted the public position they have portrayed.

“He responded to me on the 5th of January this year rejecting our appeal for a change. But we are determined to continue to push the case.”

Asian countries were talking about the threat to tourism, and Mr Cossar said the Pacific Islands were in direct line for major damage as most fed inbound travel through New Zealand or Australia.

“The Pacific is vulnerable. They are still trying to build their industry. This is just another nail in the coffin.”

Mr Key said Mr Brown had argued the increase was modest for economy passengers. “But in terms of business travellers it is a much more dramatic increase and that will have an impact.

“We would be very concerned if there was a contagion effect as a result of Britain’s decision to put on this departure tax. Clearly there is a risk it will spread to continental Europe.”

Mr Cossar, talking with his Australian counterparts at the Transport and Tourism Forum about the issue, said there was a collective will to band together and fight the imposition of taxes or duties that made long-haul flights more expensive.

“How far does this go? What happens when the United States starts doing the same thing?”

Mr Key had spoken with Australian Prime Minister Kevin Rudd on the issue and both countries, as well as Singapore, had conveyed their opposition to authorities in Britain.

“We are forever hopeful, but we have now spent 14 months on this issue and made very little progress. It hasn’t been for want of trying.”

Air New Zealand said it had been unable to ascertain whether the tax had affected demand, and was not aware of any country planning to copy the British charges.