IATA fights new tourism taxes in Japan and New Zealand

by CHIEF CORRESPONDENT, TOM BALLANTYNE  

February 1st 2018

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Proposed new taxes on airline passengers in Japan and New Zealand have provoked a sharp response from the International Air Transport Association (IATA). Read More » It argued the additional charges contradicted the International Civil Aviation Organization’s (ICAO) international policies on taxation.

New Zealand has proposed a tourism tax on international visitors, a plan IATA has asked to be reconsidered. In Japan, where the introduction of a Tourism and/or Solidarity Tax is being discussed by Japanese authorities, IATA has prepared a position paper arguing against implementation of the tax.

“Making air travel more expensive by charging a tourism tax could reduce international passengers to New Zealand by 78,000 annually. It would have a NZ$100 million (US$70.2 million) negative impact on the country’s GDP and result in the loss of 1,200 jobs,” IATA’s Regional Director for Member and External Relations, and Airport, Passenger, Cargo and Security, Asia Pacific, Vinoop Goel, said.

Data compiled by the World Travel and Tourism Council revealed New Zealand’s travel and tourism sector contributed 17.5% to the country’s GDP and generated more than 580,000 jobs. By 2027, revenue from tourism is forecast to produce 18.2% of GDP and create 712,000 jobs. “The potential increase in GDP and jobs is put at risk by the proposed tourism tax,” he said.

ICAO does not support the collection of airline sourced taxes if they are not invested in the airline industry. It is a policy IATA follows. “We strongly oppose any form of tax or fee where the resulting revenue is not reinvested in aviation services or infrastructure. This tax clearly increases general government revenue,” the global airline association said.

IATA said if the government did introduce the New Zealand tax, it should take direct responsibility for its collection. “The proposed tax calls for New Zealand citizens and residents to be exempt from the tax. Such exemptions cannot be automated when tickets are purchased. It would be an administrative burden, a cost and a nightmare if airlines had to process the tax manually. The practical approach is for the authorities to collect the tax on arrival or departure so applicable exemptions are granted accurately,” IATA said.

Following a reported plan for a tourism tax in Japan, IATA said: “Improved airline services and the availability of attractive air fares to the travelling public have been important factors. By assisting in the development of tourism and foreign trade, airlines can make an important contribution to the local economy.

“As the economic benefits from tourism accrue to the wider economy, levying a discriminatory tourism tax on an enabling sector like aviation is an ineffective and ill-conceived policy choice. Government funding of tourism and tourism-related initiatives should be achieved through less distortionary means such as general government revenue.”