Tourism hit by British move

ANDREW GORRIE/Dominion Post

BARMY IDEA: Telecom spoofed the British in this 2005 ad, but UK visitors matter to the tourist industry.

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A huge increase in departure tax from Britain will hurt the already suffering tourist industry, representatives say.

The new charges, already described as a "tax grab" and "revenue gathering exercise", were announced by the British Government yesterday as part of a 21 billion pound ($59 billion) economic package aimed at reinforcing the country's economy.

Currently, passengers flying out of Britain are charged a departure tax of 40 pounds (NZ$111.61). That would increase to 55 pounds in November next year and 85 pounds in November 2010, taking the total cost of taxes and surcharges to 235 pounds (NZ$655).

The increases were expected to hit New Zealand's inbound tourism, which was already down 10 per cent in the past two years.

Prime Minister and Tourism Minister John Key and Tourism New Zealand chief executive George Hickton were set yesterday to host the Queen and Duke of Edinburgh and London mayor Boris Johnson in the $4 million inflatable rugby ball installed in London for the promotion of the 2011 Rugby World Cup.

It was unclear whether Mr Key or Mr Hickton would raise the issue.

The new charges would be applied across four bands of destinations, with the most expensive and most distant band including New Zealand, Australia and other southern hemisphere destinations. Business passengers will pay twice as much as those in economy.

Air New Zealand's head of international airline, Ed Sims said the increase would have a negative impact on the airline and tourism industries which were already struggling due to higher costs and falling demand.

"We will be talking to the New Zealand Government to see what actions are available."

Inbound Tourism Operators Council chief executive Paul Yeo said Mr Darling's justification that the tax was environmentally-targeted held very little merit and it was effectively a "tax grab".

A family of four would be looking at an extra $1000 for a Britain-New Zealand trip, he said.

"It doesn't matter whether it's someone from the UK coming here or a Kiwi visiting there," Mr Yeo said.

It was clear they were trying to make up for lowering their VAT point-of-sale taxes and saw the travel and tourism industry as a "soft target", he said.

"They are trying to dress it up under environmental issues, but in effect the money goes into the government coffers," Mr Yeo said.

Inbound British tourist numbers were already down about 10 per cent for October compared to two years ago as the economic crisis hit home around the world.

Mr Yeo said the new tax would hurt this further.

People already committed to coming as far as New Zealand might bite the bullet and go anyway, but buy less when they arrived.

Corporate travel specialists Gilpin Travel managing director Keith Sumner said the supposed "green" tax would be unpopular with companies who took their carbon footprint seriously and were working to offset their travel.

"I would assume the business traveller will be very cynical."

The higher costs for premium seats also made no sense on an environmental basis. "A premium seat on an aircraft is making the same emissions [as an economy seat]. That's a wealth tax, not a green tax," he said.

However, he doubted business travellers would change their itineraries just to avoid the tax when they were already paying more than $10,000 for a return fare.

"It's something they'll take on the chin. It's not enough to justify routing around it."

- © Fairfax NZ News