Tash McGill: Tax with little going for it

Andrew Little's tourist tax would bring scant benefit to the industry and the country and could lead to tourists choosing other destinations over NZ, says Tash McGill. Photo / 123RF

Tash McGill explains why tourist taxes and pillow payments are a bad idea for New Zealand.

I am astounded by the parochial attitude of New Zealanders who would support further taxes on tourism. It's almost as astonishing as the proposed "pillow tax" for Auckland. For a country that throws up its arms about invoking any other user-pays system, there seem to be a disproportionate number who welcome the idea of making tourists pay for the infrastructure our country so desperately needs.

No, I know there are parts of the industry who are also dismayed, but what grinds my gears are those New Zealanders who genuinely seem to view tourists as some sort of imposition and mistakenly assume that all tourists are foreigners, instead of a decent portion of Kiwis getting out and about in their own great country.

Shall we start with the pillows? Here's how that debate played out in a conversation with potential travellers just last week. Cashed-up and ready to go, they were making a choice based on bang for buck between New Zealand and Australia. Just the kind of visitor we love, this environmentally sensitive and culture-loving foodie 30-something couple knew they were in for a long-haul flight and no matter who they flew — from West Coast US it's between $1500-$2000 per person. It came down to how long they could make their trip last, based on estimated costs per day.

Here's the kicker, guys — New Zealand lost. Because it's expensive to visit here. In Los Angeles recently, it cost me $42 to hire a car for two days on a one-way hire. That's just over half what it cost me the last time I grabbed a taxi from the airport into Auckland's CBD. A taxi into Queenstown from the airport carries a similar cost.

The Kiwi perception (and willingness) to pay for decent quality food is to be admired — but it's important to remember that suggesting a $40-$50 per person daily food budget over a week will get you nothing but raised eyebrows and nervous gulps among travellers from many other parts of the world. After all, we Kiwis migrate in droves to the shores of Thailand for $3 street food dinners and affordable five-star resorts.

Affordable is a variable value. So is impact. It's more pillows we need, not the same number of expensive ones — and we need them now. And we need them in places other than Auckland.

Which brings me to Andrew Little's proposed tourism tax. The Labour leader wants to put a "modest" levy on arrivals at the airport. The money would be ring-fenced and passed to local councils to use on tourism-related infrastructure.

Plane tickets are already expensive; most Kiwis have no idea how big a $1500 airfare sounds to someone from a big continent, where most holidays are reached with shorthaul flights. And would you waive the levy to sustain transtasman business travel? Say goodbye to the family-holiday-across-the-Ditch Aussie market. Times that tax by five and it's a big hit to the family pocket. And in revenue terms, it will bring in less than a splash of what's needed.

Let me explain. If we maintain our tourism numbers and we tax everyone coming in the gate on a non-Kiwi passport on non-business travel, in a 12-month period we might garner $80m from airports and seaports. Which Little suggests will then be siphoned through central government to local government. I'll generously assume a 5 per cent handling fee for the port, then 20 per cent at central government, followed by local government administration (say 20 per cent) to receive and allocate those funds. We're at $40m (hopefully) after 12 months of collection.

Who knows how long it might take to distribute and when split between New Zealand's 29 tourism regions it's just over $1m each. Do it per capita and the revenue still drops in major centres without solving the problem for all of the non-tourist, regional New Zealanders who desperately need this infrastructure too.

The pillow tax mooted by Auckland mayor Phil Goff has the same kind of mathematical problem. More expense for less impact.

But there are Kiwis who happily buy that no-impact outcome. Because I suspect there are some of us who simply aren't as welcoming as the marketing suggests. They think there are too many tourists clogging up the roads already. Perhaps they've forgotten the roads, railways and outdoor activities are as much for us as they are for those who come to this place to be welcomed, inspired and engaged.