The remarkable growth in the New Zealand visitor economy since 2013, while delivering enormous benefits, has placed pressure on parts of the tourism system. TIA believes that New Zealand must address current and approaching public infrastructure deficits, respond to community concerns and build future industry capability.
Central Government is a major beneficiary of international tourism. For example, through the GST paid on purchases, international visitors currently pay $1.7 billion a year in GST. Unlike other countries, our visitors cannot claim any of these taxes back. Central government also receives company taxes and PAYE from businesses and those employed in the tourism sector, and soon, through the IVL, central government will extract more funds from international visitors.
While Central Government benefits, significant costs associated with visitors are borne by local communities, especially in regions with small ratepayer bases. Communities with high visitor intensity have infrastructure, facility and service demands that cannot, and should not, be funded through rates alone. Visitors use facilities locally, yet benefits are enjoyed nationally.
TIA has explored a wide range of options on how local government funding needs can best be addressed. The universal payment of GST is seen by TIA as the most effective, efficient and fairest way of collecting the visitor contribution.
TIA’s proposal is that Central Government makes an annual calculation equivalent to 20% of the GST already collected from international visitors and distributes these funds via a Trust to Local Government to address local tourism-related needs, with the allocation determined by the measured level of visitor impact on each territorial local authority.