OPINION: Tourism already generates plenty of tax - Chris Roberts

Tourists contribute enough to the economy already; another tax on them is not required, the writer argues. Photo / File

Opinion

"In this world, nothing can be said to be certain, except death and taxes." That was the view more than 200 years ago of Benjamin Franklin and it still rings true. But could taxes be a slow death for the New Zealand tourism industry?

There are frequent calls for new tourist taxes. Economist Tim Hazeldine made the case for a $250 per visitor peak season "congestion charge" in the Herald this week. New Tourism Minister Kelvin Davis has officials investigating options for tourism taxes and levies – and what any additional revenue would actually be spent on.

Tourism Industry Aotearoa agrees this is a discussion we need to have. This debate about taxing visitors never goes away. A look back through the archives shows this organisation has responded to tax proposals many times over the years. "Visitors are a burden and we need to tax them" – not just a refrain heard today but one expressed decades ago, when the tourism industry was a fraction of the size and importance it is now.

So what are the facts? For simplicity's sake, let us put aside, but not forget, domestic tourism, which generates more than $20 billion of economic activity throughout New Zealand every year. International tourism brings in $14.5b a year. It is easily our biggest export earner and has been number one for 15 of the past 20 years.

Since 2013, roughly half of New Zealand's total export growth has come from tourism. The economy would have looked very pallid without it. Our international guests are spending $13m a day more than they were four years ago.

The Government is doing very well out of the tourism boom. The GST collected from visitors has risen from $800m a year to $1.5b. It is also getting significantly higher company and PAYE taxes from the thousands of businesses and hundreds of thousands of employees serving those visitors.

New Zealand has an incredible tourism product that meets or exceeds the expectations of 93 per cent of our visitors coming here to experience it. However, like any product in high demand, there is a need for continuous improvement to stay at the top of our game and to make the capital investments needed to ensure long-term sustainability.

Tourism businesses are doing this across the country. Hundreds of millions of dollars are being spent refurbishing hotels and holiday parks, buying new vehicles and vessels, upgrading airports, replacing gondolas, employing more staff, and so on.

A tricky area is the provision of public infrastructure, which is used by locals and visitors alike. This infrastructure is provided by central government, through agencies like the Department of Conservation and the Transport Agency, and by local government.

We recognise visitor growth can put pressure on local government infrastructure, which is primarily provided for residents, but which has often seen long-term under-investment. In many cases, the remaining capacity of this infrastructure is getting used up by the increase in visitors.

So what to do about this? We lobbied hard for a central government infrastructure fund of sufficient scale to assist the most deserving and pressing investments to be made in time to support visitor growth. An initial $3m annual fund established by the previous Government in 2016 was upgraded in 2017 to a $25m a year fund.

In the first round of this new fund 30 projects were approved that will help communities manage growing visitor numbers. This approach effectively allows some of the GST tax dividend to be re-invested back into the regions to help with the most pressing infrastructure needs. It is well targeted, and hasn't required the imposition of another tax.

On a grander scale is the new Government's $1b regional growth fund. This is an opportunity for regions to access funding for transformational tourism projects that will deliver long-lasting benefits.

Our international visitors already pay a lot of tax and are more than paying their way. If there is to be any new tax, it needs to be justified, fair, workable, efficient, ring-fenced for tourism investments and consistently applied nationally.

* Chris Roberts is chief executive of Tourism Industry Aotearoa.