Flight tax challenge

New Zealand politicians are often criticised for their propensity to toddle off overseas on taxpayer-funded junkets. This year's so-called Speaker's tour of Eastern Europe and the 2007 parliamentary rugby tour to France are two notable recent examples, the Nelson Mail said in an editorial on Thursday.

However, Prime Minister John Key's current bout of globe-hopping is in quite another category. His first week in the top job continued at the frenetic pace he has maintained virtually from election night. As it happens, his decision to tack a whistlestop visit to Britain to the end of this week's Apec summit in Peru could not have been better timed, as it coincided with a British government move to significantly increase its airport departure tax - a plan that is troubling the New Zealand tourism industry.

The tax will add significantly to the cost of departing the United Kingdom by air. It currently stings those flying to New Zealand for an extra $113, rises to $155 in 12 months and by November 2010 it will push up the price by $240 a ticket. It is being touted as an environment tax and is applied over four bands, depending on distance travelled from Britain.

New Zealand and other southern Pacific countries will be among those hardest hit. Kiwis holidaying in Britain will also be affected as they will have to pay the higher tax as they head for home.

In much the same way as his predecessor Helen Clark added arts and culture to the usual prime ministerial workload, Mr Key wrote his name on the tourism portfolio when he announced his Cabinet last week. This underscores the critical importance he attaches to the tourist industry, this country's largest earner of export dollars.

The UK is New Zealand's second largest visitor market, worth an estimated $1 billion a year. Tourism New Zealand recently launched a $7.3 million, television-based marketing campaign there, aimed at boosting the 290,000 visitors drawn here from the UK in the year to June.

The prime minister's first meeting with his British counterpart Gordon Brown came shortly after the departure tax plan was announced and he took the opportunity to articulate this country's distaste for it. The concerns are two-fold. It shapes as one more disincentive to Britons to undertake the long-distance pilgrimage to the antipodes - numbers were already down by 4 per cent in the latest year, and the global economic crisis clearly poses a huge threat to the travel industry globally. It also might be a device taken up by other countries keen to clamber on the air-miles bandwagon in order to keep their citizens, and their wallets, at home rather than boosting foreign exchange earnings abroad.

Mr Key talks of other ways to "handle the situation" but has not elaborated and says he will continue to pursue the matter with the British government. He adds that it is a "small issue that needs to be kept in perspective" and that it will not sour the two countries' strong relationship. However, it is difficult to see it as other than another widening of the gap between the "home country" and its one-time most far-flung colony.

Just as New Zealand is throwing in its lot, more and more, with the economies of the Asia-Pacific region for largely pragmatic reasons, so too is Britain increasingly embracing Europe. A symptom of that growing divide came earlier this year when Britain proposed abolishing the "ancestor visa" which allows people whose grandparents were born in the United Kingdom to live there for four years and eventually apply for residency. The move was shelved after personal intervention from Miss Clark. Hopefully, Mr Key's advocacy will find similar success.

- © Fairfax NZ News