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Tourism Minister leaps to defence of hated departure tax

July 8, 2013 DESTINATION, Headline News No Comments Email Email

egtmedia59Australia’s much-maligned departure tax has copped another serve – this time from IATA’s director general and chief executive, Tony Tyler, at the National Aviation Press Club in Sydney.

But Tourism Minister Gary Gray has sprung to the defence of the tax.

Tyler called on the Australian government to reconsider the economic damage being done by the tax, known officially as the Passenger Movement Charge (PMC). The departure tax was originally designed to fund Australia’s border agencies, including customs and border protection, quarantine 250x250and immigration.

Last year, it was increased to AUD 55 per passenger which exceeds the cost of funding these agencies.  It is estimated that about AUD 800 million will be collected in the 2012-2013 fiscal year.

“The PMC is effectively a tax that adds about 3.5% to the cost of travel from Australia,” Tyler declared.

“If it were removed we would expect a 2.5% boost to traffic. That would add AUD 1.7 billion to the Australian economy and generate some 17,000 jobs.

“So the Australian economy has more to gain from removing the PMC than from keeping it in place,” said Tyler, who referred to a new IATA study on the economic benefits of abolishing the PMC.

“This illustrates the critical importance of thorough cost-benefit analysis for all policy decisions. I urge the government to re-evaluate the overall economic impact of making connectivity more expensive than it needs to be.”

Tourism Minister Gary Gray responded that 20% of the additional revenue raised by the PMC was given back to the industry through grants.

This includes the four-year AUD 48.5 million Asian Marketing Fund and the AUD 48.5 million Tourism Industry Development Fund, which help to stimulate tourism demand by funding increased marketing activity in Asia and by increasing the quality of Australia’s tourism product, he said.

“The charge of AUD 55 also funds a range of border protection and transport security measures that helps provide consumers with the confidence to fly,” Gray said.

“It needs to be considered in the context of an Australian tourism industry being worth AUD 107 billion. It is the eighth largest tourism industry in the world and the largest by visitor spend, with average international visitor spending AUD 4096 in Australia.

“The increase in the charge in July 2012, from AUD 47 to AUD 55, has not impacted on visitor numbers. In fact, since then international visitor numbers have grown by 5% over the previous period. The charge accounts for less than 1% of an average international visitor’s spend.”

Written by : Peter Needham

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