UK travel tax threat to tourist spending

An increase in British departure taxes could mean visitors have less to spend when they get here, tourism industry experts say.

A green tax, designed to help pay for the environmental costs of air travel, kicked in yesterday, adding £15 ($33) to the existing £40 departure tax charged on airline tickets.

The increase is the first stage of a rise mooted in October last year which will see the tax bumped up again to £85 in November next year.

Britain is New Zealand's second largest visitor market after Australia and before the global financial crisis close to 290,000 tourists travelled here each year bringing close to a billion dollars into the country.

But the crisis has hit long-haul travel hard.

In the year to September British visitor arrivals were down 10 per cent to 259,639 and in the year to June spending plummeted $188 million to the lowest level in five years - a drop of 18.6 per cent to $826 million.

Around 94,000 New Zealanders also travel to Britain each year.

House of Travel retail director Brent Thomas said while the green tax was an added cost, when airfares of today were compared with 10 years ago they were pretty much unchanged.

He did not believe the increase would stop people from travelling.

"People have a budget and they will work within that."

Thomas said it had not stopped New Zealanders booking to go to Britain and the company had already seen a 30 per cent spike on its early season specials compared with the same time last year.

But bookings remain 5 per cent down on 2007, before the global financial crisis began to hit home, he said.

In-bound Tour Operators Council chief executive Paul Yeo said he did not believe the tax would stop Brits coming to New Zealand.

"It's already a big holiday - I don't think it will turn them off. What we don't like is that it is a blatant tax grab by the UK Government. It's just abhorrent."

Yeo said while it would not turn people off coming here it would potentially mean they had less to spend once they arrived.

"It takes that money out of their pockets."

People only had so much budget to work with and if more was spent on getting to New Zealand they might not have as much to spend on accommodation or attractions.

Tourism Industry Association chief executive Tim Cossar said there was no hard evidence that the tax had impacted arrivals.

"Arrivals out of the UK have been down recently, but it's very hard to put a line under it and attribute how much could be due to the tax when there are so many other variables at play."

But Cossar said the industry was concerned that any tax should be transparent.

"It should be directly linked to whatever it's been collected for and that doesn't seem to be the case in the UK for example."

Cossar said the association would be keeping a close watch on the effects of the tax.