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Tourism Industry Aotearoa has assessed the potential impact of a $100 International Visitor Levy and it makes for uncomfortable reading.
Earlier this year the Government opened consultation on the International Visitor Levy and whether it should be $35, $50, $70 or $100 for most visitors. A Government decision on the IVL is pending.
“By our calculations, a $100 IVL could result in 48,000 fewer visitor arrivals and strip out $273 million of international visitor spend from the economy. This would create a significant barrier at a time when the industry, our second largest export, is sitting around 80 per cent of recovery,” TIA chief executive Rebecca Ingram says.
The industry cares about the IVL and the role it can play in funding gaps. Following engagement with its members, TIA said $50 was the fairest option if the IVL had to be raised, as this considered inflation and ensured appropriate funds for investment in key tourism infrastructure and conservation projects.
Recovering tourism industry striving to be competitive globally
The pending decision on the level of the IVL comes hot on the heels of a 62 per cent increase to some immigration visa and levy charges along with cuts to Tourism New Zealand’s budget. TIA members have expressed significant concern at the fast-increasing cost of entry at the border and the barriers this creates.
“Tourism is a global business and we are motivated to ensure New Zealand is competitive when high-quality visitors are making choices about where to go on holiday. We are particularly concerned about the cumulative effect of these fees, which we believe will have a material impact on visitor numbers, a vital workforce and the economic contributions they bring,” Rebecca says.
“We urge the Government to factor in the significant economic benefits that international visitors bring and our export earnings, rather than focusing solely on cost recovery at the expense of our tourism sector.
“Our assessment is that it could cost around $500 per person in Government border charges for some visitors, before they have spent a dollar Aotearoa New Zealand – if the IVL lifts to $100.”
Data shows that international visitors are more than paying their way. In the year to March 2023, tourism directly and indirectly generated about $22.1 billion for the economy (GDP) and international visitors contributed $1b in GST. Tourism is the only export sector that pays GST.
“We care about the contribution tourism makes to New Zealand and we are not alone. Ninety three per cent of New Zealanders believe international visitors are good for New Zealand.”
Industry keen to work with Government
There is also a wider conversation that must be had about tourism funding. While funds for tourism are welcome, the IVL is only one part of this solution.
“The IVL is a blunt instrument and using it as a panacea for all tourism funding requirements, and raising it to a very high level, is not the answer. Nor does it solve the problem of ensuring local councils and communities can invest in the tourism-related infrastructure they need,” Rebecca says.
The industry is motivated to work with the Government and local government on solving this long-standing issue and impediment to progress by looking for new funding sources.
“We strongly support more elegant solutions that collect additional revenue while visitors are travelling through the country and do not present a large upfront cost when considering New Zealand as a destination.”
