Mr BALCH - 1998-08-18
How will the recently announced tax reform package affect tourism?
ANSWER
Madam Speaker, Territorians would know that tourism comprises some 19% of our gross state product. Next to mining, at 21%, it is a very important industry. It is worth noting, while I am on my feet, that there will be significant advantages to the mining industry – for example, the diesel fuel rebate and the removal of fringe benefits tax on housing in mining communities.
For tourism, the reform package will reduce business costs by removing wholesale sales tax and its hidden impacts. A range of Territory taxes will be removed, including financial institutions duty, debit tax and some stamp duties, and there will be a significant reduction in diesel fuel excise for businesses.
In response to earlier questions asked by the Leader of the Opposition, the inescapable fact is that people will be paying less for fuel, particularly in this industry, and those cost reductions will be offset by the introduction of a 10% GST. The impact on prices will vary, however, among different sections of the tourism industry, as one would expect. The Territory’s position relative to the rest of Australia should improve, given the effect on transport costs, the reduction in diesel fuel excise and the removal of the tourism marketing duty, commonly known as the bed tax. Of course, that will lessen the impact of the GST on accommodation. It is worth noting that the opposition has had very little to say about that.
The package also includes personal income tax cuts, pension increases and family payments that will be more than sufficient to compensate individuals. They will have greater disposable income for discretionary activities such as holidays. That is important because the domestic tourism market is softening at the moment. If Australians embrace the package, interstate residents will have more disposable income in their pockets and will be more likely to decide to visit the Territory.
Tourism operators will benefit from the introduction of a comprehensive diesel fuel credit for registered businesses. This will reduce the effective excise rate on diesel used in heavy transport. For example, the cost will reduce from 43 per litre to 18 per litre for passenger coaches over 3.5 t. Anyone who can do arithmetic will recognise that this will move the bottom line for tourism operators and make their businesses more competitive. There will be a greater return to those operators. Operators using smaller vehicles such as 4-wheel-drives for safari packages will be subject to a smaller change of 7 per litre on the price of their diesel fuel.
Tourism operators will be able to claim a full rebate for all GST paid on inputs. They will benefit also from the removal of wholesale sales tax on vehicles, which is currently 32%. That will make a huge difference to people in this sector. Further, tourism operators generally have significant advertising, printing and promotion costs. While the GST will apply to the purchase of these items, tourism operators will be able to claim back the full amount of the GST paid on these inputs. The net effect will be no increase in the cost of these services and probably some reduction due to the removal of taxes, reducing costs for those supplying these services. I believe that this package ...
Mr Bailey interjecting.
Mr STONE: The member for Wanguri interjected that it is cheaper to go overseas. He would rather have a collapsed economy in Australia so we can compete with Bali! That is how inane his comment was.
I hope tourism operators and those associated with the industry are prepared to work it out for themselves. They will be much better off with this package than they are at present. I am confident, from my discussions with the tourism sector, that the package will be given the support it deserves.
ANSWER
Madam Speaker, Territorians would know that tourism comprises some 19% of our gross state product. Next to mining, at 21%, it is a very important industry. It is worth noting, while I am on my feet, that there will be significant advantages to the mining industry – for example, the diesel fuel rebate and the removal of fringe benefits tax on housing in mining communities.
For tourism, the reform package will reduce business costs by removing wholesale sales tax and its hidden impacts. A range of Territory taxes will be removed, including financial institutions duty, debit tax and some stamp duties, and there will be a significant reduction in diesel fuel excise for businesses.
In response to earlier questions asked by the Leader of the Opposition, the inescapable fact is that people will be paying less for fuel, particularly in this industry, and those cost reductions will be offset by the introduction of a 10% GST. The impact on prices will vary, however, among different sections of the tourism industry, as one would expect. The Territory’s position relative to the rest of Australia should improve, given the effect on transport costs, the reduction in diesel fuel excise and the removal of the tourism marketing duty, commonly known as the bed tax. Of course, that will lessen the impact of the GST on accommodation. It is worth noting that the opposition has had very little to say about that.
The package also includes personal income tax cuts, pension increases and family payments that will be more than sufficient to compensate individuals. They will have greater disposable income for discretionary activities such as holidays. That is important because the domestic tourism market is softening at the moment. If Australians embrace the package, interstate residents will have more disposable income in their pockets and will be more likely to decide to visit the Territory.
Tourism operators will benefit from the introduction of a comprehensive diesel fuel credit for registered businesses. This will reduce the effective excise rate on diesel used in heavy transport. For example, the cost will reduce from 43 per litre to 18 per litre for passenger coaches over 3.5 t. Anyone who can do arithmetic will recognise that this will move the bottom line for tourism operators and make their businesses more competitive. There will be a greater return to those operators. Operators using smaller vehicles such as 4-wheel-drives for safari packages will be subject to a smaller change of 7 per litre on the price of their diesel fuel.
Tourism operators will be able to claim a full rebate for all GST paid on inputs. They will benefit also from the removal of wholesale sales tax on vehicles, which is currently 32%. That will make a huge difference to people in this sector. Further, tourism operators generally have significant advertising, printing and promotion costs. While the GST will apply to the purchase of these items, tourism operators will be able to claim back the full amount of the GST paid on these inputs. The net effect will be no increase in the cost of these services and probably some reduction due to the removal of taxes, reducing costs for those supplying these services. I believe that this package ...
Mr Bailey interjecting.
Mr STONE: The member for Wanguri interjected that it is cheaper to go overseas. He would rather have a collapsed economy in Australia so we can compete with Bali! That is how inane his comment was.
I hope tourism operators and those associated with the industry are prepared to work it out for themselves. They will be much better off with this package than they are at present. I am confident, from my discussions with the tourism sector, that the package will be given the support it deserves.
Last updated: 09 Aug 2016