The tourism industry says companies are going to go bust and jobs will be lost if Inland Revenue renegs on a deal it made with inbound operators seven years ago.
The operators say they were assured they would not have to pay GST on certain transactions, but now the tax department is seeking 30 million dollars.
Tourism is New Zealand’s shop window to the world, and now the IRD wants a bigger share of the eight billion dollar industry by claiming another $30 million in back taxes.
The tourism council says in 2001 it was agreed with the IRD that tourist operators here wouldn't have to pay GST on the bills it sends to overseas tour operators for arranging their tours.
Now the IRD says it has changed its mind, but the inbound tour operators says they have formal documents signed by the IRD, and will produce them tomorrow.
“The tax dept can't put something in writing and then arbitrarily go back and reverse their decisions and charge back taxes on that as well,” says Brian Henderson, from the Inbound Tour Operators Council.
Tourism minister Damien O'Conner is caught in the middle. He says the tax issue needs tidying up.
“Clearly some of the industry player have been paying gst, some haven't. It's really important we get the facts on the table so we can work out what would be a fair solution to everyone,” says O’Connor.
The IRD does not always get its way. It bankrupted Christchurch property developer Dave Henderson in the nineties but he battled back, eventually buying the IRD building, evicting them and turning his story into a film.
The IRD will want to ensure this scrap is shut down in preproduction.
3 News