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The Impacts of Australia’s Passenger Movement Charge on Tourism and the Economy

Objectives

  1. The study presented in this paper provides an assessment of the increase in Australia’s Passenger Movement Charge (PMC) on the Australian economy and on the tourism industry. It has five aims:
  2. First, to discuss the nature of Australia’s PMC;
  3. Second, to outline the types of industry stakeholder concerns as to the effects of the PMC on tourism, both before and after the recent increase;
  4. Third, to present a framework developed by the authors that can be used to distinguish the effects of the increased PMC on the wider economy and on different tourism markets. This framework highlights the conflicting interests of the tourism industry and the broader Australian economy;
  5. Fourth, using a computable general equilibrium (CGE) model, to estimate the economic impacts, on both the tourism industry and the wider economy, of the increased charge on different tourism markets – the inbound market, the outbound market, which has had much less attention from stakeholders and other researchers; and,
  6. Fifth, to discuss the implications of the modelling results for the validity of industry criticisms of the PMC.

Key findings  

  • The paper discusses the nature of the PMC
  • It outlines the types of industry stakeholder concerns as to its effects on tourism both before and after the recent increase.
  • It presents a framework developed by the authors that can be used to distinguish the effects of the increased PMC on the wider economy and on different tourism markets.
  • A computable general equilibrium model is used to estimate the economic impacts of the increased charge on different Australian tourism markets - inbound, outbound and domestic.
  • The study throws light on the validity of the concerns of tourism stakeholders on the effects of the increased departure tax. Most importantly, it shows that calls for the complete abolition of the PMC (BARA 2012) reveal a failure to understand that the tax benefits the Australian economy. While the tourism industry may indeed lose from the increased PMC, the economy as a whole may gain.

Implications for Practice  

  • The implications of the modelling results for the validity of the industry criticisms of the PMC are discussed.
  • The results confirm that the tourism industry will suffer, though it also indicates that the Australian economy will gain- thus there is a clash between the industry and wider economic interests.
  • The types of issues addressed in this paper can inform policy making regarding the gainers and losers from departure tax increases in tourism destinations generally.

 

Publication details

 

Publication Title:

 

 The Impacts of Australia’s Passenger Movement Charge on Tourism and the Economy

Full Publication Reference:

P. Forsyth, L. Dwyer, T Duc Pham R. Spurr (2014) “The Impacts of Australia’s Passenger Movement Charge on Tourism and the Economy” Tourism Management Vol 40 pp 126-136

Publication Author or Authors:

Peter Forsyth, Larry Dwyer, Tien Duc Pham, Ray Spurr

Proposed by

Name:

Larry Dwyer

Phone:

0439648892

Email: 

l.dwyer@unsw.edu.au

Position:

Research Professor

Employer

University of New South Wales