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Media Releases
Media Releases
This page details the Media Releases that have been recently issued by ITOC:
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Date: 20 May 2010
The announcement in today’s Government Budget that boosts international tourism marketing spend by $30 million is welcomed however the increase in GST to 15 percent from 1 October is a blow to the inbound tourism sector which will damage competitiveness and financially penalise many businesses.
“The increased funding for Tourism New Zealand is wonderful news and presents the industry with lots of opportunities that we are keen to exploit. We’re particularly pleased that $5 million of the increase will be allocated to joint venture initiatives, or partnerships between Government and the private sector and this is where we have the potential to contribute ideas and marketing funds to boost visitor arrivals and expenditure”, says Inbound Tour Operators Council of New Zealand (ITOC) Chief Executive, Paul Yeo.
“Last year’s combination of increased funding and a renewed desire by Tourism New Zealand to partner up with industry has already shown benefits, particularly from Australia and the United States. The Government has obviously taken notice and is now looking to add more funding and seek wider engagement with industry to do even better in the coming year.”
The reduction in company tax rate is also applauded as a positive move for tourism businesses.
However despite the welcome news the announcement of a GST increase from 1 October will make many in the inbound tour operator sector wince with pain.
“Inbound tour operators who package New Zealand products and sell them overseas are the only exporters to be penalised by the proposed increase in GST. This is because their service fee is subject to GST unlike other professional service providers like accountants, IT consultants and engineers who can zero rate their fees for services exported”,
While this is inequitable in theory it really begins to bite in practice when New Zealand based inbound tour operators compete with Australian based tour operators who also package New Zealand and avoid paying GST on their service fees, giving them a significant and unfair price advantage. We are concerned that some of our members will relocate overseas, close down completely or lay off staff as they will find it increasingly difficult to compete with the pricing offered by offshore tour operators, says Mr Yeo.
“The increase from 12.5 percent to 15 percent will further highlight the price differential between New Zealand based inbound tour operators and their overseas counterparts, drastically reducing our long term competitiveness and viability.”
“Despite long running discussions with both politicians and officials to make them aware of the inequities it appears they have decided to press on which is disappointing in light of the Prime Minister and Minister of Tourism’s acknowledgement of tourism as a key export industry.”
A second blow dealt in today’s announcement is a result of the GST increase taking effect on 1 October 2010 rather than later as was hoped for.
“Our tour prices given to overseas buyers are contractually locked into place up to two years in advance to enable them to include products in brochures that are now sitting in travel agents’ brochure racks and web sites around the globe. Many overseas consumers will have already made bookings for travel after 1 October based on the 12.5 percent GST rate and either paid a deposit or in full, but this payment will not necessarily have yet made its way back to inbound tour operators in New Zealand.”
“In many instances we will be forced to account for the products sold at 15 percent and therefore have to absorb the increase which will hit us hard.Theoretically we might be able to ask the customer for the increase but in reality this would damage New Zealand’s reputation amongst both overseas travellers and the global travel industry. The amounts may not be large for an individual booking but when an inbound tour operator is handling thousands of passengers the amount we may have to absorb could be frightening.“
“The lead time prior to 1 October is very tight for us and we lobbied hard for a delayed introduction into next year to make it easier. It will be a logistical nightmare as it’s not like changing price tags in a local supermarket or shop – our shop is overseas and the prices printed in brochures are now out of our control so we’ll simply have to swallow the increase and take the pain”, says Mr Yeo.
ITOC has worked with the Tourism Industry Association and PriceWaterhouseCoopers to prepare an advice paper for members on the various technical aspects of accounting for the increase in GST which is available to members.
ITOC Background:
The Inbound Tour Operators Council of NZ was founded in 1971. It represents 250 tour operators and suppliers throughout the country who package, distribute and market New Zealand tourism products and services internationally.
ENDS
For more information, please contact:
Paul Yeo Brian Henderson
Chief Executive President
DDI: 04 495 0813 Mob: 027 552 5877
Mob: 027 255 2549
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Enquiries to: Email: info@itoc.org.nz Fax: +64 4 499 0786; Phone: +64 4 496 4898
Enquiries to: Email: info@itoc.org.nz Fax: +64 4 499 0786; Phone: +64 4 496 4898