Government proposes increasing tourist levy to $100 for visitors to New Zealand

Tourists could be charged $100 to enter the country if an option floated by the Government is adopted. That would be close to three times the current levy.

The International Visitor Conservation and Tourism Levy (IVL) was introduced in 2019 and levied on adults from countries excluding those from Australia and the Pacific Islands.

Now the Government is seeking feedback on whether to increase the IVL.

In spite of some industry pressure to include Australia, there is no proposal to change the countries that pay the IVL.

Tourists could be charged $100 to enter the country if an option floated by the Government is adopted. Photo / 123rf

The Ministry of Business Innovation and Employment (MBIE) is also seeking feedback on what IVL revenue is used for across tourism and conservation.

“The Government believes too many costs imposed by international visitors are paid by taxpayers and ratepayers and wishes to explore raising the IVL amount to help visitors more fairly contribute towards the services they use in New Zealand,” MBIE says.

In 2019, the unfunded cost of international visitors was estimated at $250 million a year to New Zealand, including tourism infrastructure and conservation-related costs. This comprised up to $150m shared between the private sector, local and central government and about $96m of Department of Conservation spending.

Assuming arrivals grow to match pre-pandemic figures, the IVL at its current $35 will generate between $80m a year between 2024 and 2026.

Options for consultation are: leaving it at $35, increasing it to $50 which would raise about $115m, increasing to $70 to raise $161m and increasing it to $100 to raise $230m.

Tourism and Hospitality Minister Matt Doocey said in a discussion document there were concerns international tourists weren’t paying their fair share.

“I believe too many costs are falling on the ratepayer and taxpayer. Raising the IVL will help the Government address the issues facing tourism, ensuring that we can provide high-quality visitor experiences,” he said.

He wants to ensure an increase in the IVL has a minimal impact on visitor demand to travel to New Zealand.

For the latest 12 months, that travel is worth close to $11 billion.

He said the IVL was the country’s most significant tourism funding tool.

“This funding allows us to react nimbly to issues arising for tourism operators, visitors, and New Zealanders, while also supporting our ambitions for tourism. However, the IVL does not raise enough funding to cover all these costs, with the remainder either covered by the Crown or not addressed.”

For most regions, tourism and hospitality were key drivers of economic growth. International visitors spent widely across the economy on fuel, groceries, retail goods, transport, accommodation, tourism activities, and attractions.

Visitor numbers neared 3 million last year, well short of the 3.9 million who arrived in 2019.

“As we grow, we know that our public infrastructure and conservation estate may face considerable pressure from higher visitor numbers,” Doocey said.

The MBIE document says there is no up-to-date modelling on the impact of an increase in the IVL but a study in Britain found that “moderate” increases in visa fees had a low impact on demand.

Airline passengers were also charged $19.08 by Customs, $19.46 by MPI and $13.12 by the Civil Aviation Authority. Airport charges vary and are heading up.

The paper says IVL funds could be used to part fund city or regional deals with tourism or conservation elements, support the development of Destination Management Plans, invest in car parks and public toilets, data collection and continue to invest in cycle trails and expand this to tramping and walking tracks.

Chris Roberts was head of Tourism Industry Aotearoa when the charge was first introduced and would like to see one part of the initial scheme brought back.

“When the IVL was established there was an independent panel to advise how the money should be spent. It met a couple of times and was then disbanded. That independent assessment needs to be brought back, he said.

“We need to get the structure and decision-making right to make sure the levy is actually making a difference. $100m a year spent on new initiatives that meet visitor and community needs is better than $200m used as replacement funding for things already being funded in other ways.”

Submissions on the MBIE proposals close on June 11.

Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.