Tax to hit NZ travellers' pockets in New Year

Tourism Industry Association CEO Chris Roberts says the tax of $21.57 per air passenger and $26.22 per cruise passenger is going ahead in the New Year. Photo / Brett Phibbs

The Government's new travel tax is to come in on January 1, adding $21.57 to the price of a round trip air fare to and from this country.

The announcement of the rate of the tax - imposed to cover border clearance costs - drew sharp criticism from the tourism industry who said it would put visitors off and was an unwelcome handbrake on successful efforts to grow the number of overseas visitors.

A rate of $26.22 for a cruise ship passenger was also announced by Primary Industries Minister Nathan Guy and Customs Minister Nicky Wagner.

They said the higher rate for cruise passengers reflected the additional biosecurity assessments required at ports.

"In the past these costs have been met by taxpayers," said the ministers.

"The Government considers it is fairer for the costs to fall on passengers travelling internationally."

The ministers said the levy would cover the border clearance costs for volumes of passengers rising at 3.5 per cent to 4 per cent a year.

However, Tourism Industry Association chief executive Chris Roberts said the tax ignored a long-held understanding that border services were a public good and should therefore come from general taxation.

He said the industry had urged the Government to put off introduction until at least 2017 in order to fully understand its impact.

Australia and some other countries have strict requirements for fully inclusive price advertising and unfortunately, brochures were already out for air and sea travel to New Zealand.

Imposing the tax in the New Year did not allow enough time for the airlines and cruise operators to update their systems in order to collect the tax when tickets were bought.

Cruise New Zealand general manager Raewyn Tan said the industry would be damaged at a time when it was growing.

Cruise lines had planned itineraries for the next two years but meanwhile would be reconsidering whether to come to New Zealand or to go to China or South-East Asian countries vying for tourists wanting a cheap holiday.

"Come 2018, it will be a case of penny wise and pound foolish, because that's when the full impact will hit," said Ms Tan.

"It's scary for us because this has been the best growth we have seen and we are not sure whether it will continue."

The industry was relieved at a concession: the tax would be waived for passengers under two years old, for crew and transit passengers, as well as anyone who had paid for their ticket before January 1 2016 for travel over the next 12 months.

However, Horticulture New Zealand president Julian Raine commended the Government for taking a "courageous step" to provide sustainable funding for border services.

"Passengers need to take some of the responsibility for protecting our primary industries, home gardens and our native species," he said.

"Every passenger entering this country presents a risk. We must have systems in place to process and check that risk.

New Zealand's border control or "Travel Tax"

• 1 January, comes into effect.
• $21.57 (incl GST) per air passenger.
• $26.22 (incl GST) per cruise ship passenger.
• 10.1 million passengers came to NZ in 2014.
• 13.3 million expected in 2018-19.
• A$55 per passenger levy by Australia.
• £71 long-haul passenger charge by United Kingdom.

Readers of nzherald.co.nz have been swift to state their views, mostly against, on the travel tax.

Neil Canton wrote: "The amount of tax is less than the charge for an additional piece of luggage and is such a small percentage of the total travel bill that I can't agree with the prophets of doom that it is likely to have an impact on tourism."

Patrick Duffy, of Sydney: "Does New Zealand make enough money from tourists without the travel tax that can hit families visiting? New Zealand is not the cheapest place to visit these days."

Tim Duff, who owns the Raglan Backpackers and Waterfront Lodge: "I think this tax is a great idea and will not affect tourism."

Clive Sandham: "Our port is right on Queen St and a red carpet to welcome visitors, then a nice clean city. The complainers should do a world cruise."

Debbie Sharp: "It makes sense to me that those using the border pay for the border control. Overseas visitors will now contribute to the cost rather than someone who never travels."

Bill Clemett: I whole heartedly agree. We are long overdue for a travel tax which I think is small and justified."

Trevor Fisher: "A tax on visitors and then a tax on the tax - [gst]. This a straight money grab."

Martin Hector: This new tax is a rot. It will add 10 per cent to the cost of a return trip to Australia."