KI Traveller's Levy Economic Impact Assessment - Kangaroo Island ...

Commercial-in-Confidence
KI Traveller’s Levy
Impact Assessment
3.2.2 EQUITY
The concept of equity has a number of dimensions in the context of a Traveller’s Levy. It
suggests that travellers with similar characteristics undertaking a similar activity should be
treated similarly, and that travellers with different characteristics, or undertaking different
activities, should be differentiated. It implies that a Traveller’s Levy should not discriminate
against a particular group of traveller or method of travel, or place a disproportionate burden
on any individual segment of the market.
KI residents
A key consideration in this context is the application of the treatment of KI resident
ratepayers and off-island ratepayers. In both instances there is a strong case for exempting
them from a Traveller’s Levy on the grounds that they already contribute to the cost of local
infrastructure. As noted, ratepayers already pay above-average rates relative to comparable
municipalities, and Council is projecting small annual real rate rises in future as part of the
strategy for managing Council’s financial position. This argument is amplified in the case of
off-island ratepayers, who are far smaller beneficiaries from their contributions to Council
than their on-island counterparts.
Groups and families
A Traveller’s Levy should also not place a disproportionate burden on those travelling in
groups, particularly families. A single per-person charge would impose – in relative terms – a
significant cost on families with multiple children. This would be circumvented with
exemptions for children under a given age, a family/group charge or a per-vehicle levy.
3.2.3 REVENUE SUSTAINABILITY
In order to satisfy the criteria of revenue sustainability, to ensure a levy provides Council with
a sufficient, reliable revenue stream, it should be rendered on a stable, projectable revenue
base. There must be a level of certainty that this base will not be eroded over time, or
fluctuate too significantly.
The main potential point of differentiation in the revenue base for a Traveller’s Levy would be
the inclusion or exclusion of local residents. Irrespective, the likely absence of significant
behavioural change in response to the introduction of levy – i.e. the fact that demand is
unlikely to reduce significantly by the introduction of a Traveller’s Levy – suggests that
revenue sustainability does not pose a significant challenge in the design of a levy.
Revenues will of course fluctuate with visitation, and hence be subject to seasonal and
cyclical trends, however subject to the usual degree of uncertainty, these can be factored
into revenue projections relatively easily.
The other important aspect of revenue sustainability is compliance and enforcement –
ensuring that, over time, the levy continues to be rendered, collected and remitted as
planned. The simpler the levy design, the more straightforward this will be. If it is a flat rate
per-traveller, then it can easily be monitored based on visitor numbers. Where it is integrated
with wharfage fees and landing charges, again the scope for non-compliance is minimal.
Only where the design of the levy is more sophisticated, would issues of compliance and
enforcement likely arise.
3.2.4 COMPETITIVE NEUTRALITY
From a competitive neutrality perspective, an important consideration in the design of a
Traveller’s Levy is ensuring that those who travel to the Island by air and those who travel by
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