The Tourism Industry Association New Zealand (TIA) believes that hiking GST from 12.5 percent to 15 percent w. e. f. 1 October will create challenges in front of tourism operators who have set their prices up to 2012.

The Government who had announced that it would extend a $25 million marketing boost is now jittery about how to go about with a rise in GST.

"But today's GST increase will create transitional issues as tourism operators working in the international marketplace set their contracts up to two years in advance. They will now need to decide whether they can raise those prices to take account of today's increase in GST or whether to absorb the increase," TIA Chief Executive, Tim Cossar quoted.

In addition, he told that Prime Minister John Key's pre-budget announcement last week was highly honored, as was an announcement today to introduce a two percent reduction in company tax rates.

Industry leaders were reportedly working with specialists to give members advice on how to sustain amidst the technical challenges presented by the change, however, it could pose an effect on New Zealand's relative competitiveness with other international destinations, Mr Cossar posted.

Mr. Cossar uncovered that the Government accumulated nearly $633 million annually in GST straight from international tourists and that was prepared to hike to about $760m as per the new rate proposal.