Tourism and Taxes: Implications for the Australian Economy and the Tourism Industry of an Increase in the Passenger Movement Charge

This paper estimates the economic impacts of the Australian Passenger Movement Charge (PMC). The PMC is a charge currently levied $47 per passenger for nearly all outbound travellers. It covers both visitors to Australia when they make their return journey and outbound travellers from Australia. It thus represents a tax on inbound tourism to Australia and on outbound tourism from Australia. The study proceeds by examining the impacts of a 20% increase in the PMC. A computable general equilibrium (CGE) model is used to assess the impacts of the PMC on key economic variables. For the Australian economy as a whole, a rise in the PMC is found to be positive, although it is negative for the tourism industry. This comes about because Australia gains from foreign tourists paying Australian taxes rather than Australian residents. This effect is sufficient to outweigh impacts on the tourism industry.