Mixed bag for tourism in last night’s budget

May 9, 2012 Corporate, Headline News 1 Comment  Print  Email

Australia’s Federal Treasurer Wayne Swan delivered a mixed bag for the tourism industry last night.

The Government has earmarked AUD61 million over four years for Tourism Australia to establish the Asia Marketing Fund. The money will be used to promote Australia as a destination for holiday and business tourists from Asia.

One of the worst aspects of the Budget from a tourism perspective is a 17% rise in the passenger movement charge, often called departure tax.

Tourism spending – and therefore jobs in the tourism sector – will be hit by the decision to slug visitors with those extra fees, the Tourism & Transport Forum (TTF) was quick to point out.

TTF chief executive John Lee said the tourism industry was “tired of being a cash cow for government, while other sectors receive massive cash injections.

“Increasing the passenger movement charge (PMC) from AUD47 to AUD55 will mean a family of four from New Zealand – Australia’s biggest source market – will pay more than NZD280 just to leave our country,” Lee said.

“This will reduce the amount of money they spend while they’re here and that reduction in economic activity will threaten jobs.

“It is very disappointing to find out that our concerns about the possibility of a rise in the PMC – denied numerous times by the government – were on the money.

“And if that isn’t punishment enough, the government has also announced the introduction of user-pays for Australian Federal Police at airports, netting a further AUD118 million.

“The message from the Gillard government is clear – when you enter an airport, everywhere you turn, you will be taxed.

“Considering international tourism arrivals to Australia are flat, the last thing the tourism industry needs is another barrier to attracting visitors from overseas, however that’s exactly what this budget delivers – an extra quarter of a billion dollars a year in taxes on tourism.”

Australian Tourism Export Council (ATEC) managing director, Felicia Mariani described the investment of Passenger Movement Charge (PMC) dividends towards the marketing of Australia as a positive outcome for the tourism industry, but agreed that the ongoing increase would damage Australia’s international competitiveness.

She said the new PMC-backed investment of AUD61 million over four years into Tourism Australia’s Asian Marketing Fund, announced in the Budget, would provide ongoing support to help the industry maximise the tremendous opportunities coming from the fast growing Asian market.

“At the same time this investment comes with a significant cost to industry with the Federal Government increasing the departure tax and indexing it to CPI on an annual basis.

“This is effectively a tax that will, year-on-year, add to the overall cost of international travel to Australia and will no doubt have a significant impact on our international competitiveness,” Mariani said.

The “carryback” Budget provision announced earlier, that lets businesses “carry back” losses, offsetting them against earlier profitable years to gain a refund of tax paid previously on that profit – was introduced as Swan promised.

It allows businesses to apply any losses of up to AUD1 million made in the financial year to tax already paid on profits made the year before, to receive a refund of some of the tax paid. From 2013-14, eligible businesses will be able to apply those losses to profits made in the previous two years. They won’t see funds until after they lodge their tax claims for 2012-13.

As suspected, however, the carryback initiative applies only to incorporated companies. It excludes small businesses operating as trusts, sole traders or partnerships – the kind of businesses that are common in the tourism and hospitality industry.

Operators of those may gain some solace from a measure that, from 1 July 2012, will allow all businesses with an annual turnover of less than AUD2 million to write-off all eligible assets costing up to AUD6500, as well as the first AUD5000 in the cost of a new vehicle. That applies to businesses whether they are incorporated or not.

Company tax rate remains the same. Swan has ditched the anticipated 1% cut to company tax – choosing instead to fund a AUD3.6 billion package of handout measures to support families and households, which he called Spreading the Benefits of the Boom.

Duty-free operators and Big Tobacco are likely to be disappointed in the Budget. From 1 September 2012, the government will chop the inbound duty-free tobacco allowance for international travellers (including Australian travellers returning from overseas trips) to just one fifth of the current allowance. Travellers will be allowed to buy just 50 cigarettes or 50 grams of tobacco duty free. Existing rules let inbound travellers aged over 18 bring into Australia 250 cigarettes or 250 grams of tobacco products tax-free. It will earn the Government money and may save a life or two.

In a Budget measure likely to be viewed more kindly by the industry, the Standard Tourist Program Charge to visit the Great Barrier Reef Marine Park with a commerical operator will fall from AUD6 to AUD3.50 a day. The cost of a part-day pass will drop from AUD3 to AUD1.75.

Written by Peter Needham