The peak body for Victoria’s accommodation providers, the Hotel, Motel and Accommodation Association of Victoria (HMAAV), has cautiously welcomed the Commonwealth Government’s partial concession on extending the GST to previously-untaxed Australian tourism exports, but has again called for the Government to drop the proposed legislation in its entirety.

 

“As argued to the Senate Economics Committee, which has been examining the proposed legislation by the HMAA (as represented by VECCI Senior Economist Chris Cudsi, who gave evidence on behalf of HMAA at the public hearings in Brisbane), the proposed legislation will be unenforceable”, says HMAA (Vic) Chairman, Harry Korpetutuncu.

 

“The Government’s decision to introduce a transition period and move to an input taxing model is less unpalatable compared to what was previously proposed.

 

“The decision to make GST registration optional, rather than compulsory, for foreign tour operators (FTOs) will reduce the impact on the competitiveness of Australian tourism product sold overseas vis a vis the tourism product of other countries.

 

“But we still question what the Government seeks to gain by proceeding with the legislation - the expected revenue gain from this legislation will be quite low, given that FTO registration will likely be very low.  Compounding this, the expenses faced by the ATO in enforcing compliance will be very high in proportion to the revenue gained.

 

“Apart from these administrative concerns, the legislation runs counter to Government policy, as espoused in the recently announced Tourism White Paper, to `assist the tourism industry to capture, maintain and grow future market share’.  Extending the GST to include tourism products booked overseas (which are essentially exports in any meaningful sense) counteracts the White Paper’s aim, and is also inconsistent with the treatment of other exports, which are GST free.

 

“For example, the legislation appears similarly inconsistent with the GST treatment of domestic air travel that is booked overseas as part of an international flight (which is GST free).  Indeed, the legislation renders the GST discriminatory against all tourism exports except air travel, with no explanation or rationale provided for the difference in tax treatment”, says Mr Korpetutuncu.