Tour operators sue Cullen over GST

Fifteen inbound tour operators are suing Finance Minister Michael Cullen over his move to block retrospectively GST refunds on overseas income.

The group has filed papers in the High Court at Wellington claiming that Dr Cullen breached a section of the Tax Administration Act requiring him to treat taxpayers impartially.

"You can't treat taxpayers in the same situation differently," said Don Gunn, president of the Inbound Tourism Operators Council.

"Some businesses did not pay GST, while others did and the Inland Revenue has approved their refunds. But businesses with existing claims face the carpet being pulled from under their feet."

The tour operators, who with schools and universities with foreign fee-paying students had their claims blocked when Dr Cullen back-dated tax rule changes in mid-May, want the court to rule that Dr Cullen and the Inland Revenue commissioner breached their obligations to treat taxpayers impartially.

"If the court rules that was the case, then we will review our options for taking further action," said Mr Gunn.

Tour operators have filed more than $125 million in GST claims on overseas revenue with the Inland Revenue Department. Schools and universities have claimed about $50 million.

The department believes another $40 million of claims could have come in had the law not been tightened.

The claims still in the system will not be paid - unless the companies can prove they have refunded the GST to the tourists or students.

The law change was widely criticised in business and tax circles and is now before Parliament's finance and expenditure select committee.

- NZPA