23 May 2015

Legislation passed on KiwiSaver, air levy tax

9:58 pm on 23 May 2015

Parliament has passed legislation imposing a tax on international travellers but no decision has been made on how much they will have to pay.

Labour MP Dr David Clark (left) and Labour MP Jacinda Ardern (right) in question time.

Labour MP David Clark (left) and Labour MP Jacinda Ardern Photo: RNZ / Alexander Robertson

It is the last Budget-related piece of legislation considered by MPs, who have sat under urgency since Thursday afternoon.

Auckland Airport said the Government's proposed tax on international travellers could affect the tourism industry.

The levy is expected to take effect from 1 January 2016, and will be around $16 for arriving passengers and around $6 for departing passengers - although the exact amounts will be subject to public consultation.

Minister Nathan Guy told Parliament a traveller might be charged about $22, but that would only be decided after consulting the public.

The cost of border clearance for passengers and crew costs about $100 million a year.

"In the past, these costs have been met by taxpayers. The Government considers it is fairer for the costs to fall on passengers travelling internationally," said Mr Guy.

In a statement, Auckland Airport said the new tax was disappointing as it has previously worked closely with the Government to remove barriers to tourism and travel.

It said some price-sensitive tourists could be put off coming to New Zealand because of the new levy.

The Airports Association has also warned the new levy could put travellers off from visiting the country.

"There has been no consultation with the sector on the introduction of this tax which has the potential to negatively impact NZ's economy," said its chief executive Kevin Ward.

"As a country we need to do all that we can to encourage an increase in visitors to our shores."

The Tourism Industry Association's chief executive, Chris Roberts, said there was no justification for the new tax.

"International visitors spend $10.3 billion a year in the New Zealand economy, including $700m a year in GST collected by the Government. They are already making a substantial contribution and there is no justification for this new tax," said Mr Roberts.

"And once these types of taxes are in place, there is a tendency for the level to escalate."

The Association claimed Government was being duplicitous with the proposed tax.

Mr Roberts said the announcement took him by complete surprise, as he had worked with the Government to oppose similar taxes in the UK and Australia.

Both associations said they would make submissions when consultation on the design, introduction and level of the levy opened in early June.

KiwiSaver bill 'rammed through'

Parliament has passed legislation scrapping the $1000 KiwiSaver kickstart payment.

Finance Minister Bill English said removing the payment would save the Government more than $500 million over the next four years.

But Labour MP David Clark said the change would have a negative effect on the country's savings.

"This will be a disincentive to join the scheme. We know from the IRD's research over the history of the scheme that they used to make about 36 percent additional saving as a result of the KiwiSaver scheme. This is going to put a big dent in that."

Labour's Ruth Dyson said the legislation was being rammed through because National MPs did not want to front up to the public about making the changes.

"Let alone their own constituents, for those who are electorate MPs, or for list MPs - they can't front up to the people that they deceived during the election campaign by not mentioning that they would take away the $1000."

But National's Nick Smith said Labour was being contradictory by not supporting the bill. He said Labour criticised measures in the Budget to help vulnerable families then voted with the Government on the legislation.

"Here's the contradiction. Members opposite can't vote for a bill that provides for more support for New Zealand's poorest families in one breath then, in the next breath, vote against the changes that will enable us to fund that."

The bill to remove the kickstart passed its first and second reading by 63 votes to 58 with Labour, the Greens and New Zealand First voting against it.

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