Not a public good

The Herald reports:

The Government’s new travel tax is to come in on January 1, adding $21.57 to the price of a round trip air fare to and from this country.

The announcement of the rate of the tax – imposed to cover border clearance costs – drew sharp criticism from the tourism industry who said it would put visitors off and was an unwelcome handbrake on successful efforts to grow the number of overseas visitors. …

“In the past these costs have been met by taxpayers,” said the ministers.

“The Government considers it is fairer for the costs to fall on passengers travelling internationally.”

The ministers said the levy would cover the border clearance costs for volumes of passengers rising at 3.5 per cent to 4 per cent a year.

However, Tourism Industry Association chief executive Chris Roberts said the tax ignored a long-held understanding that border services were a and should therefore come from general taxation.

This is simply not the case. The definition of a public good is:

a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others.

Individuals can be excluded from use (ie they don’t travel) and people using border services do reduce the availability to others as they have finite resources.

I don’t see why non-travelers should pay for border processing for travelers.

Comments (42)

Login to comment or vote