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Tourism industry gains under GST

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John Hewson M E D I A R E L E A S E

262/91 24 November 1991


The Liberal and National Parties see tourism as a major generator of both jobs and of foreign exchange. Australia has a unique natural and cultural heritage which is a proven attraction to both Australians and overseas visitors.

The Liberal/National policy package is designed to allow the tourism industry to reap its full potential. At present the industry is stifled by taxes, rigid industrial awards, and project approval processes hamstrung by green tape.

There is no doubt that the tourism industry will be

significantly advantaged by the implementation of the Liberal/ National reform program.

The industry will gain from a number of measures!

. abolition of the Wholesale Sales Tax, fuel costs, payroll tax and full rebate of GST on business inputs will

dramatically reduce tourism industry costs;

. abolition of payroll tax, which costs Australian industry a total of $5.9 billion and suppresses jobs, will be of particular benefit to the tourism industry, a large employer of Australians;

. reduction in the price of diesel and petrol fuels by

26 cents per litre for business users. As most tours have a large land transport component, this will

significantly decrease operating costs. It is estimated for a tour bus travelling 140,000 km per annum, the savings on fuel alone will be $16,500 per year;

. the cost of filling the tank of the average private motor car will fall by about $11.00, depending on the size of the vehicle. The 78 per cent of Australians who use their own care for holidays will have a greater incentive

to undertake domestic travel;

. personal income tax amounting to a record $13 billion will give Australians more money in their pockets to spend on holidays and leisure;

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. our policy to encourage more competition on domestic and international air routes, e.g. allowing Qantas and Air New Zealand to fly domestic passengers and to encourage more international charters, will prompt further

reductions in fares, both for internal and international travel;

. freeing up of the labour market will result in conditions of employment which reflect both the particular needs of the industry, and the preferences of the tourism

workforce, many of whom value part-time or casual work. Costly penalty rates and annual leave loadings under rigid awards can be dispensed with under new enterprise agreements which suit the needs of both employers and employees;

. the Australian Tourism Commission will be reorganised to maximise Australia's efforts to increase the inflow of foreign tourists;

. many in the tourism industry operate small businesses and they will benefit from extended relief from capital gains tax and from the more generous and equitable

superannuation arrangements;

. the accelerated project approval process through the Prime Ministerial Taskforce on sustainable Development will provide clear, consistent, and predictable guidelines for project development.

Tourists visiting Australia who purchase travel packages overseas will pay GST on the land based component of the package. International and domestic airfares purchased abroad will not be subject to GST, nor will outbound tourists pay GST

on airfares.

In short, foreign tourists will be taxed in Australia, as Australian tourists are taxed in most overseas countries. In this way, overseas tourists will help to pay their share of the costs of the roads, bridges and airports and other

infrastructure they use.

GST will not apply to goods purchased in Duty Free stores or to goods that are "exported" by being mailed to the tourist's home address overseas.

Claims that the tourism industry should be somehow quarantined from the GST are not supported by either overseas practice nor by the principle that the expenditure base for the GST should be as wide as possible.

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However, the Coalition will be happy to hold further

consultations with the tourist industry on the application of GST, following a request for discussions from the Chairman of the Australian Tourism Industry Association, Sir Frank Moore.

Overall, the reductions in the domestic cost structure for tourist operators flowing from abolition of seven taxes, reform of industrial relations and Infrastructure reform such as the third Sydney runway at Mascot and airport privatisation will significantly offset the GST, providing overall incentive

for the continued development of tourism as a growth industry of huge potential.

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For further information contact (075) 793 499