Fears GST hike could hit tourism

Some tourism operators who set their prices two years in advance in the international marketplace may be hurt if GST is hiked within that time, the Tourism Industry Association says.

The TIA is preparing to lobby Prime Minister John Key, who is also Tourism Minister, after he told Parliament yesterday that increasing GST to 15 percent was being "carefully considered".

TIA chief executive Tim Cossar said any increase in GST could impact on the New Zealand tourism industry's international competitiveness relative to other visitor destinations.

Mr Cossar said that in his statement to Parliament Mr Key acknowledged tourism as one of New Zealand's key export industries.

"So any increase in GST will need careful consideration to ensure it doesn't put at risk the $25 million New Zealand earns from international tourism every day, especially following the Government's $20 million boost to funding for international marketing," Mr Cossar said.

The TIA would highlight its concerns about the potential impacts of a GST increase to Mr Key.

Mr Cossar said the timing of the increase would need attention, as tourism operators working in the international marketplace set their prices up to two years in advance, so would need time to adjust their rates if GST was increased.

"New Zealand-based inbound tour operators, who compete with inbound tour operators based overseas, will be particularly hard hit. Overseas inbounders do not pay GST so an increase will worsen the relative position of the New Zealand businesses."

This could also be a good time for the Government to consider introducing a GST refund scheme for international visitors, to help protect their contribution to the economy, Mr Cossar said.

International visitors currently contribute about $633 million in GST payments a year. Increasing GST to 15 percent would increase their contribution by about $14 million annually.