5 Jul 2002

New services tax in New Caledonia will affect tourism industry

11:07 am on 5 July 2002

A New Caledonian politician warns that the economy will suffer because of the introduction of a services tax to finance the government's new social security plan.

The leader of the opposition, Alliance Party, Didier Leroux says the 4 percent tax will make all services and products such as food and hotel rates more expensive.

The government introduced the tax to fund it's new compulsory social security or health insurance plan despite widespread public opposition.

Mr Leroux says small businesses, the self employed suggested instead a revenue tax, which the government ignored.

New Caledonia already has a goods and services or value added tax.

Mr Leroux says the first to be affected by the tax will be the tourism and hospitality industries.

"It is an indirect tax which is based on the services, just like VAT, but you cannot get it back. For some people the tax is a lot and there is no reason why a tourist in New Caledonia should finance part of the social security system."

Didier Leroux