A delegation including AFTA chief executive Jayson Westbury and Tourism & Transport Forum Australia (TTF) chief executive Margy Osmond appeared yesterday at the Senate inquiry into the Federal Government’s backpacker tax.
They told the inquiry that there was no economic justification for the Government to increase its departure tax – the Passenger Movement Charge (PMC) – to AUD 60 from 1 July 2017.
Osmond and Westbury tabled an analysis by KPMG that confirms the Federal Government will raise the AUD 540 million target it has arbitrarily set itself through the proposed changes to how backpackers are treated for tax purposes without the need to increase the holiday tax as well.
“We made the point very firmly to the Senate Committee that AUD 5 is a big deal to the travel industry and that any increase to the PMC is unwelcomed particularly when it is proposed to do nothing by top up revenue targets created by the government.”
Osmond told the inquiry that the tourism industry did not accept that the holiday tax hike must be considered lock-step with the backpacker tax package.
“They are two separate issues and as the KMPG analysis, that TTF has had commissioned, shows it is completely unnecessary for the Government to reach its desired revenue raising goal of AUD 540 million over the forward estimates.
“The Government wants this tax package to “wash its face”, and that’s fine, but it doesn’t have to take the travelling public to the cleaners.
“TTF’s position is that the reform package for working holiday makers should be supported by the Parliament to allow industry to secure its workforce and work to rebuild the working holiday market through the AUD 10 million funding allocation to Tourism Australia to run a promotional campaign.
“The holiday tax, or as the Government calls it the Passenger Movement Charge, on the other hand, will impact on 9.7 million Australians and 8 million international visitors departing the country and needs to be seriously scrutinised by policymakers on what its full impact will be before it becomes law,” Osmond said.
“The Government should never have included an increase to the Passenger Movement Charge in the reform package it announced last month, and TTF will make the strongest case why hiking the holiday tax should be abandoned.
“The Passenger Movement Charge is a AUD 1 billion tax on travel. It was introduced as a cost-recovery charge for passenger facilitation services (customs, border security) at our international gateways. The cost of providing those services is estimated to be around AUD 250 million, meaning that the Federal Government is profiting to the tune of AUD 750 million a year. That alone should be reason enough for the cash grab to be knocked back by the Senate.”
In a broader sense, the travel industry “is incredibly sensitive to price”, Osmond said.
“Tourism is a global industry and Australia is competing with destinations, many of which are much shorter distance than Australia, that are aggressively cutting the cost of travel.
“The Federal Government is very keen to dismiss this as just a AUD 5 increase or “a cup of coffee”. No, it will now be a AUD 60 tax on travel. That is AUD 240 for a family of four (over the age of 12). But when you add that to other travel costs such as the AUD 135 visa charge for a Chinese visitor – visa fees plus the holiday tax it brings the total cost of travel to Australia to nearly AUD 200 per person.”
The various bills are likely to be debated in the Senate the week of the 7 November 2016.
Edited by Peter Needham