Monday, 15 January 2018

Vogons vs Backpackers

Backpacker hostels face big fines if they continue the long held tradition of casually offering travellers free beds in exchange for unpaid labour.

Some industry stalwarts say travellers can't be bothered with the paperwork now required to legally work for accommodation, and they worry it will destroy hostel culture.

But the Labour Inspectorate is preparing to get heavy with those who do flout the law and is monitoring job advertisements on backpacker and work exchange websites.
There is a real tax and distortion issue here, but there might be a simpler solution. Backpackers will have an incentive to barter for cleaning services with backpacking patrons because PAYE and GST won't be imposed. But that could potentially be solved by having the hostels report the value of accommodation-nights provided under that kind of arrangement and charge FBT on it. That would get rid of the tax distortion while allowing mutually advantageous trades between backpacking tourists and hostels.

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