Time to tax tourists to help struggling councils
The tourism industry and local government have been piling unprecedented pressure on the Government to splash the cash on our teetering tourist infrastructure.
Thursday’s big pre-Budget reveal by Tourism Minister Paula Bennett has partly addressed those pleas. I
t’s a victory of sorts for our booming visitor industry and biggest export-earner, but the planned financial reinvestment falls well short of the sector’s needs or expectations.
Tourism Export Council chief executive Lesley Immink encapsulated the overwhelming mood by dubbing the Government’s extra $60m contribution as ‘‘underwhelming’’.
‘‘That’s $15m a year over the next four years. What are their priorities? They talk about having a commitment to tourism but I’m not seeing any evidence of it.’’
The $60m injection will be added to the existing $41.5m in tourism funding, providing the sector with $102m over four years, to invest in visitor infrastructure. But consistent industry and local government analysis concludes that the sector requires $100m annually, to meet the ballooning demand and strain on infrastructure.
International visitor arrivals totalled 3.5 million last year, which the government is forecasting will nudge 5 million within six years. Those foreign tourists spent $10 billion last year, which is forecast to hit $15m in 2023.
International visitors generated over $1b in GST revenue in 2016, up 20 per cent year on year. So the Government’s reinvestment topup is still a trifling gesture.
The southern mayors stretching across greater Canterbury, Otago, Southland and the West Coast are unanimous that annual infrastructure funding must be placed on a secure and stable footing – rather than the ad hoc gesture politics of election year.
Bennett, who is not enamoured with the notion of a formalised tourism levy, is being urged to reconsider by the mayors.
I totally concur with their stance that a $20 tourist levy would provide a much more stable pipeline for infrastructure funding, or as Queenstown Mayor Jim Boult put it, ‘‘a permanent solution to the issue’’.
Eighteen months ago, the Border Clearance Levy (BCL) came into force, a widely misunderstood revenue-catcher, which is not a tourist tax per se, but a user-pays charge geared at self-funding all Biosecurity and Customs border screening operations.
The BCL adds $21 to $26 to a return airfare or cruise booking, regardless of whether you’re a New Zealand citizen or foreign national.
Some groups, including the Green Party, want to double the BCL, with half the proceeds being diverted to the Department of Conservation coffers and the Regional Tourism Facilities Fund.
That approach would unfairly clobber New Zealand taxpayers, who would rightly resist being milked.
So what is the most effective collection mechanism at the border, without it snagging New Zealand passport holders?
As you may have noticed, when you book an international flight, most websites don’t require you to enter your passport details at the time of booking, so expecting airlines to differentiate and apply a tourist tax to non-New Zealand passport holders only, clearly isn’t tenable.
Similarly, since the advent of smart-gate, visitors from Australia, Britain, Canada and the USA enjoy automated access into New Zealand, without needing to personally present themselves to a beady-eyed official before heading to the baggage carousel.
So how or when would the financial transaction take place on arrival at the border?
A recent Air New Zealand-commissioned report proposed all travellers, domestic and foreign, should pay a two per cent surcharge on their accommodation tariff, and a $5 increase to the BCL. But why should Kiwis be nailed by tourist taxes in their own country?
Nor do we want a disparate hodge-podge of regional bed taxes, which is causing Auckland Mayor Phil Goff, substantial grief.
Tourist taxes require central government aptitude and I still believe the cleanest solution is to go back to the future, with Departure Tax at our airports.
Collect a $20 tax from non-New Zealand passport holders and stamp their boarding pass, as they depart.
Based on current visitor numbers, a $20 tax would generate a very tidy $70m annually, which would not only cover capital costs for projects but could support the operational costs too.
Councils with low-rating bases deserve no less.
‘‘To make progress on the housing issue (or crisis, if you prefer), we need good, honest, open debate about it, without the threat of political retaliation. And no gagging orders. Even in an election year.’’ Editorial