How hidden travel tax in budget will force Aussie travellers to pay more

The move, which has been described as a “tourism tax”, is expected to send prices soaring.

Tourism organisations have slammed a measure in the federal budget that will inject $1.3bn to the government coffers as a move that will increase travel costs for everyday Australians.

Inside Treasurer Jim Chalmers’ Tuesday budget was a decision to lift the Passenger Movement Charge (PMC) by $10 to $70 from July 2024.

The move was described as a “tourism tax” which would spell disaster for the travel industry amid its recovery from the Covid-19 pandemic by Tourism and Transport Forum (TTF) chief executive Margy Osmond.

The charge is only applied for outbound flights from Australia and was introduced to fund border security measures. Picture: NCA NewsWire / Jeremy Piper

“This will make it even more difficult for tourism to bounce back, as cost-of-living pressures increase and as the industry rebuilds from the devastating impacts of the Covid pandemic,” Ms Osmond said.

“It will also make it more expensive for international tourists to come to Australia, at a time when we’re desperately trying to attract more visitors, with Australia’s international tourism levels still below pre-Covid levels.”

The extra $10 charge on every flight leaving Australia will generate $1.38 billion in revenue in 2024/25 according to calculations from the Australian Federation of Travel Agents (AFTA).

AFTA chief executive Dean Long said that “now is not the time for additional taxes” as travel remains 30 per cent below pre-Covid levels.

“Today’s decision to increase the PMC by 16% is extremely disappointing and will make it harder for Australians families to stay connected,” Mr Long said.

Jim Chalmers handed down his first budget as Treasurer. Picture: NCA NewsWire/ Dylan Robinson

“We know that the PMC does reduce air capacity to Australia and with supply of air seat still tracking 30% to pre Covid levels this will slow down our recovery.”

The TTF is calling for the government to impose a five-year freeze on future increases “to provide certainty for the tourism sector”.

“As we continue to recover from the biggest event to impact the tourism industry in recent memory, the freeze will be critically important to give the industry much-needed certainty,” she said.

“The government also needs to be more transparent about how the money collected through the PMC is spent, explaining where exactly it’s allocated given the average rate of over collection.

AFTA says that the increase will cost the industry an extra $520M over the 5 years from 2022/23.

Originally published as How hidden travel tax in budget will force Aussie travellers to pay more