The New Zealand government looks to have cemented New Zealand as one of the most expensive countries in the world for a holiday today by increasing the International Visitor Conservation and Tourism Levy (IVL) to $100, according to a statement from NZ Airports. The total cost to cross the border has now reached $495-$625, 64-108% higher than just last year, and 70% more than Australia.
“Increasing the IVL, increasing visa fees, and proposals for new charges on regional airports have landed as a triple-whammy for our sector, which is trying to work hard for New Zealand’s economic recovery,” NZ Airports Chief Executive Billie Moore says. “But this is not just about us – this is simply bad policy. The government’s own modelling from just two years ago showed that a lift of $100 at the border could reduce visitor demand by up to 2.61%, or 101,000 visitors based on pre-pandemic levels. That’s around $446 million in visitor spend at risk – spend that goes straight to businesses, supports jobs and generates GST for the Crown – for the sake of raising a funding pot for MBIE. And that doesn’t even capture the compounding impact of the visa fee increases.
“This will end up being a money-go-round with levies suppressing demand and the government needing to spend more to stimulate it through tourism marketing. We are struggling to see how this makes sense from a government that wants to be pro-business and pro-growth. Back when the IVL was introduced, the National Party recognised it for what it was – a tax on tourists who already more than pay their own way through billions in GST that goes straight to the Crown,” Moore said. “Ministers and agencies must look beyond their agency bottom lines and realise that this is not the way a country makes money and grows its economy. We urge the government to go back to its roots and get agencies working on policies that will grow tourism rather than stagnate it.”
The International Air Transport Association (IATA) also weighed in on the levy and said it was disappointed in the move.
“It has been a double whammy for the New Zealand travel and tourism sector, starting with New Zealand Immigration announcing steep increases in visa fees, and now the increase in the IVL. These changes make travel to New Zealand more expensive and less attractive and could further delay the recovery in visitor numbers to beyond 2026,” said Dr. Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia-Pacific (ad interim). The recovery of the New Zealand aviation market currently lags behind major markets such as Australia, Canada, France, Spain, the UK, and the US. These markets have either recovered to pre-pandemic passenger levels or will achieve full recovery in 2024.
“The travel and tourism sector is an important contributor to the New Zealand economy. The government’s analysis indicated that more than three times of economic activity will be removed from the country for every dollar generated from additional IVL revenue. Instead of stifling its development, the government should be looking at ways to improve the country’s competitiveness as a destination compared to other markets,” said Dr. Xie. Thailand, for example, scrapped plans for a tourism tax on air travelers in June to encourage tourist spending in other areas,” Xie said.
During the public consultation process for the IVL, IATA had provided a submission urging that the IVL not be increased. “Unfortunately, the government announced the increased levy and its application in the 2024 budget while the consultation process was still ongoing, casting doubt on the process’ effectiveness,” said Xie, adding the government did not indicate how the funds collected by the IVL will be allocated. “I urge the government to consider allocating the funds collected to projects that support the decarbonisation of the aviation sector.”
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