U.S. Travel Tax Plan Criticised

Press, Volume CVIII, Issue 31597, 7 February 1968, Page 13

U.S. Travel Tax Plan Criticised

(N.Z.P.A.-Reuter—Copyright)

WASHINGTON, February 6. The United States Administration seems likely to face a tough fight in persuading Congress to accept its plans for a special travel tax on Americans going abroad.

The first reactions to the proposed tax, which is designed to discourage American tourists from spending dollars on trips to Europe and Asia, have been generally unfavourable, and Washington observers say some scaling-down may have to be done before the measure will be passed. Many members of the travel industry see the proposal, which provides for a 5 per cent increase in airline and steamship fares and a graduated tax on hotel and food expenditure in excess of SUS 7 a day, as a punitive measure and a blow to the American’s traditional right to travel freely. Other critics fear the tax would result In retaliatory measures by other countries, and a drop in the number of tourists coming to the United States.

The proposed tax is part of a wide-ranging “crash” programme to try to reduce the nation’s balance-of-payments deficit by SUS3OOOm this year. The Treasury Secretary (Mr Henry Fowler) told Congress yesterday that the new restrictions, which would be the most severe ever imposed on Americans in peace time, did not apply to travel to LatinAmerica and Canada.

The curbs, which also include a drastic reduction in the duty-free exemption allowed to Americans on souvenirs and other goods, will save the United States about sloom, according to Mr Fowler. A Harvard University economist, Professor Gottfried Haberler, describes the plan as “a highly protectionist measure,” and Mr Howard Clark, president of the American Express Company, doubts if the proposals would bring about the balance-of-payments savings expected.

“I think such taxes could lead to retaliation by other countries which would affect our present favourable balance of trade with them,” he said.

“While the taxes would not limit spending by the well-to-do, nor the expense account traveller, they would discriminate against the student, teacher, clergymen and the middle-income family, whose traditional freedom to travel would be curtailed.”