Care needed over proposed GST changes, tourism industry says

Changes to the tax system, particularly GST, could reduce the international competitiveness of New Zealand’s multi-billion dollar tourism industry, Tourism Industry Association (TIA) Chief Executive Tim Cossar says.

“We agree that parts of the tax system need overhauling and we welcome the thorough analysis done by the Tax Working Group,” Mr Cossar says.  “But any changes will need careful consideration to ensure they don’t put at risk the $25 million New Zealand earns from international tourism every day.”

Increasing GST to 15%, as recommended by the Working Group, would have implications for the pricing of New Zealand tourism products, he says.  Tourism businesses working in the international marketplace set their prices up to two years in advance, so would need time to adjust their rates if GST is increased.

“While the proposals for a reduction in company tax rates are touted as making New Zealand more competitive with international jurisdictions, the risk for the tourism industry is that a GST increase could simply neutralise any competitive advantage,” Mr Cossar says.

Inbound Tour Operators Council (ITOC) president Brian Henderson says the main issue for the tourism industry is to ensure New Zealand operators stay competitive internationally.

“New Zealand-based inbound tour operators must be able to compete with inbound tour operators based overseas, especially in Australia, our largest market. A GST increase will worsen our relative position.”

Mr Cossar says TIA will highlight its concerns about the potential GST increase and other aspects of the tax review to the Prime Minister and Minister of Tourism, John Key, when it meets with him next month.
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