Some reprieve for tourism industry with departure tax hikes scrapped

The tourism industry looks set to win a battle over planned regular rises in departure tax, and tourism operators will also get access to a new fund to promote tourism in regional Australia.

The Federal Government is expected to dump plans to increase the passenger movement charge in line with inflation every year, although the controversial $8 hike in the charge from July 1 will stay.

An increase in the departure tax from $47 to $55 was announced in this year’s federal budget and the government initially planned to index the charge annually by movements in the Consumer Price Index.

The tourism industry was vocal in its opposition to the tax increase and had warned that the departure tax, along with the carbon tax, would harm the long-term viability of the industry. 

Now the regular increase in the tax is reported to be “off the table” and SmartCompany understands that 10% of the revenue to be collected from the passenger movement charge will go to a new component of the Regional Development Australia fund aimed at tourism investment in regional Australia.

Under the deal, expected to be announced today, this “stimulus fund” for regional tourism will be worth about $48 million extra over four years.

“We’re on track to get a very good outcome that provides some more support for Aussie tourism and still preserves the bulk of the revenue,” a government source told SmartCompany.

“It’s been a good negotiation, and that’s very likely to be reflected in a win-win agreement.”

Tourism and Transport Forum chief executive John Lee, who has been a fierce critic of the departure tax, told SmartCompany he was pleased the TTF campaign to prevent automatic annual rises in the tax had been successful.

“This would have seen the passenger movement charge go up every year without parliamentary scrutiny and without any consideration of the prevailing global economic conditions,” says Lee.

“The strong dollar has already reduced Australia’s competitiveness as an international tourism destination and adding a rising charge to that mix would have seen that position deteriorate even further, year after year.

“The Coalition, the Greens and some cross-benchers have taken industry’s concerns on board and we commend them for their foresight in opposing this inequitable impost.”