Many in the tourism industry rubbing their hands together last week following an announcement that the Government would provide a $25 million marketing boost are now worried about how to deal with a rise in GST.
TIA chief executive Tim Cossar said Prime Minister John Key's pre-budget announcement last week was welcomed, as was an announcement today that company tax rates would be reduced by two percentage points.
"But today's GST increase will create transitional issues as tourism operators working in the international marketplace set their contracts up to two years in advance," Mr Cossar said. "They will now need to decide whether they can raise those prices to take account of today's increase in GST or whether to absorb the increase."
Operators who had already taken bookings for after October 1 when the changes take effect were wondering whether they could charge for the increase.
Industry leaders were working with specialists to give members advice on how to deal with the technical challenges presented by the change, but it could impact on New Zealand's relative competitiveness with other international destinations, Mr Cossar said.
"While we don't think the increase will deter visitors from coming here, it may influence how much they spend while here."
There were also questions about how domestic tourists would respond to a GST hike.
In a new Fly Buys/Colmar Brunton traveller survey to be released next week, 34 percent of New Zealanders said it would have no impact on their holiday spending, 29 percent expected to cut back on their holiday spending and a further 24 percent said an increase would make them less likely to go on holiday.
Mr Cossar said the Government collected about $633 million annually in GST from international visitors and that was set to increase to about $760m under the new rate.
