Tourism puts hand out for 20 per cent of GST paid by overseas visitors

Monday, 8 April 2019

The tourism industry has come out against a bed tax being mooted by the Queenstown Lakes District Council, and instead wants the country's 67 local authorities to get a share of GST spending for tourist infrastructure.

Tourism Industry Aotearoa is recommending the Government gives local government 20 per cent of the GST paid by international visitors.

TIA chief executive Chris Roberts said more than $200m a year was needed in additional funding to help cover regional tourism activities and infrastructure, and the industry wants a chunk of the $1.7 billion the international visitors currently pay annually in GST.

In a submission to the Productivity Commission, which is currently considering local government funding options, TIA laid out the need for a long term national solution so councils had sufficient money to support visitor growth.

The government tourism infrastructure fund provides $25m a year, the new international visitor levy to be split between tourism and conservation from July will raise $80m, and tourism projects are also receiving grants from the provincial growth fund.

But Roberts said these were short-term solutions.

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He said the proposed share of overseas visitor GST spend could be invested and distributed by a Government-appointed trust with members from both local government and the tourism industry.

Allocation of funds could be based on where visitors stayed.

Because of limitations with commercial accommodation statistics - which don't include Airbnb - mobile phone data could eventually be used to create 'heat maps' showing where visitors spent their time.

Funding paid out annually would only go to areas which had regional destination management plans.

Roberts said the GST recommendation resulted from a week long brain-storming session by eight tourism industry and local government leaders, and it was endorsed by the TIA board who concluded it was the most effective, efficient and fairest approach.

Even though it would raise an additional $280m a year, the board rejected the idea of a two tier GST system that would see international visitors pay a extra 2.5 per cent on top of the 15 per cent paid by New Zealanders.

It was felt Inland Revenue was unlikely to support such a change, and every time they bought something international visitors would be reminded they were paying more than locals which would not go down well.

A foreign exchange transaction tax on all purchase in New Zealand by overseas visitors was also rejected, as was a departure tax based on the number of days spent here.

Based on 73m stay days a year, a $3 a day tax would raise $220m a year if Australian visitors were included, but coming on top of the border clearance and international visitor levies, it could deter visitors from coming here.

TIA did not support a bed tax on commercial accommodation because it would unfairly target one sector, missing about 60 per cent of visitors who stayed with friends and family or freedom camped, and New Zealanders would also have to pay it.