Kelvin Davis

The tourism industry looks set to take a battering if Prime Minister John Key - also the Tourism Minister - raises GST to 15 per cent, says Labour's Tourism Spokesperson Kelvin Davis.

"Not only will hardworking New Zealanders struggle to take a holiday, but New Zealand tourist operators would have to absorb the increased GST costs.

"Tourist operators have to set and advertise internationally their prices a couple of years in advance," Kelvin Davis says.

"If the Minister of Tourism increases GST then local operators would not be able to adjust their prices internationally and already slim margins will disappear.

"This would mean the quality of tourist experiences would be compromised in order to make savings and our 100% pure NZ image tarnished further.

"Many tourist operators may not survive," Kelvin Davis says.

"Added to this, our competitive edge with Australia will disappear. Australian tourism operators will be the biggest winners out of a rise in GST.

"A northern hemisphere tourist wanting a down-under holiday will most likely choose a less expensive holiday in Australia where GST is only 10 per cent to a more costly New Zealand vacation where GST looks set to rise to 15 per cent.

"Long-haul tourists will simply do the maths and head to Australia. They'd be stupid not to. So much for catching up with Australia.

"It is ironic that the Minister of Tourism may well jeopardise the very industry whose interests he is meant to be protecting," Kelvin Davis says.