“It goes straight into consolidated revenue”: AFTA’s CEO on the ‘tourist tax’

Leading industry members penned a letter to Anthony Albanese asking him to freeze the Passenger Movement Charge (or ‘tourist tax’) at $70 per person for five years after it was increased by $10 in the recent budget.

Among those leaders is the CEO of the Australian Federation of Travel Agents Dean Long who spoke with Travel Weekly about how the letter came about, the changing laws around the ‘tourist tax’ and the need for spending transparency.

Originally, the tourist tax was know as a departure tax and the Government used the term hypothecation in regards to its stance on it. The meaning in this instance was that everything that was raised to the tax went to offset the costs of running border facilitation and visa services.

“Over time they removed hypothecation,” Long said.

“So as a result, this is a direct tax and it’s been confirmed even in the Budget papers that there’s no actual commitment from the government in legislation that this increase will go to the biosecurities that they’ve announced and it says that in the fact sheets.”

Research conducted by AFTA and Long’s co-signatures from the Australian Airports Association, Cruise Lines Industry Association, and the Tourism & Transport Forum revealed that prior to the pandemic, the PMC raised about $1.2 billion per annum.

“From what we can work out from the different Budget papers, less than half of that money collected actually got spent on passenger facilitation services, either through home affairs or the Department of Agriculture,” Long said.

So what Long and his fellow travel industry leaders have called for is transparency as to what these funds are spent on and what it actually costs to run the border, which was also called for in 2017 by the Labor Government when the tourist tax was last upped.

“If you’re going to call something a charge and not a tax, there’s definitely a need for the government to be very transparent to the industry and also to the Australian travellers and visitors alike about where these funds are going and how it’s being spent,” Long told Travel Weekly.

At the moment, it goes straight into consolidated revenue and we don’t know how it’s spent or how better it could be spent.

“If we have transparency on where those funds are going, we can help government invest in better services and better processes, to collect the tax but also make that border process world-leading, which at the moment, we’re not really world-leading.”

This has led Long and his counterparts to ask that the cost of passenger facilitations should only increase when it exceeds the amount of money collected.

A key focus in the letter was the current state of the Australian travel industry and its relatively slow recovery compared to the rest of the world, particularly when it comes to aviation.

“Anything that’s going to make us less competitive in regards to securing the limited number of seats flying around the world at the moment, when we’re still 30 per cent down and Asia Pacific has the slowest recovery of the aviation sector globally, is why we’re increasing this tax at this time doesn’t make any sense,” Long said.l

So where to from here? Long said that AFTA is still in talks with the Government, opposition and the Greens to enable to freeze.

“So we’d be hopeful that as it gets to the Senate there’ll be the relative checks and balances put through the estimates hearings and we’re definitely calling on both slides to commit to a freeze,” Long said.

In a statement to Travel Weekly regarding Long’s comments and the letter, a government spokesperson from the Minister Murray Watt’s office wrote the following:

“The Albanese Government is asking international travellers, importers and producers to ensure a sustainable biosecurity system, through an increase in our Passenger Movement Charge (PMC),” the spokesperson wrote.

“In order to protect our enviable biosecurity status and the major industries that rely on it, Australia is committed to maintaining strict measures at ports and airports, including baggage inspections, x-ray machines and detector dogs.

“The modest increases to charges in the last budget are in line with inflation.”

Check out our cover of the initial letter here.