Many in the tourism industry rubbing their hands together
last week following an announcement that the Government would
provide a $25 million marketing boost are now worried about
how to deal with a rise in GST.
Tim Cossar.
The Tourism Industry Association (TIA) said an increase
in GST from 12.5 percent to 15 percent announced today
presented a difficult situation for some operators who had set
prices up to 2012.
TIA chief executive Tim Cossar said Prime Minister John Key's
pre-budget announcement last week was welcomed, as was an
announcement today that company tax rates would be reduced by
two percentage points.
"But today's GST increase will create transitional issues as
tourism operators working in the international marketplace
set their contracts up to two years in advance," Mr Cossar
said. "They will now need to decide whether they can raise
those prices to take account of today's increase in GST or
whether to absorb the increase."
Operators who had already taken bookings for after October 1
when the changes take effect were wondering whether they
could charge for the increase.
Industry leaders were working with specialists to give
members advice on how to deal with the technical challenges
presented by the change, but it could impact on New Zealand's
relative competitiveness with other international
destinations, Mr Cossar said.
"While we don't think the increase will deter visitors from
coming here, it may influence how much they spend while
here."
There were also questions about how domestic tourists would
respond to a GST hike.
In a new Fly Buys/Colmar Brunton traveller survey to be
released next week, 34 percent of New Zealanders said it
would have no impact on their holiday spending, 29 percent
expected to cut back on their holiday spending and a further
24 percent said an increase would make them less likely to go
on holiday.
Mr Cossar said the Government collected about $633 million
annually in GST from international visitors and that was set
to increase to about $760m under the new rate.
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