The New Zealand government has announced the entry tax for international tourists will almost triple from October this year, prompting backlash from tourism and aviation industry representatives.
1. International tourists entry fee
The International Visitor Conservation and Tourism Levy (IVL) was introduced in 2019, shortly before the onset of the global Covid-19 pandemic and subsequent closing of borders. The funds collected from the fee go towards maintaining tourism infrastructure and environment conservation.
The tax has to be paid when a prospect visitor requests a NZeTA (New Zealand Electronic Travel Authority) or applies for a visa and has been set at NZD $35 (€19.6) since its introduction. Today (3 September 2024), the government has announced that, as of 1 October, the IVL will increase to NZD $100 (€56).
“A $100 IVL would generally make up less than 3% of the total spending for an international visitor while in New Zealand, meaning it is unlikely to have a significant impact on visitor numbers”, Tourism Minister Matt Doocey said, adding that the funds will continue to go towards “high-value conservation areas and projects, such as supporting biodiversity in national parks and other highly visited areas and improving visitor experiences on public conservation land.”
2. Backlash from travel and aviation industries
In response to the announcement, the Tourism Industry Aotearoa (TIA), an independent association representing the country’s tourism industry, has said that the IVL increase could result in 48,000 fewer visitor arrivals and strip out NZD $273 million (€153 million) of visitor spend from the economy.
Tourism is New Zealand’s second largest export and, in 2023, contributed about NZD $13.2 billion (€7.4 billion) to the country’s economy, accounting for 3.5% of its GDP. However, the industry is still about 20% below pre-Covid levels.
“New Zealand’s tourism recovery is falling behind the rest of the world, and this will further dent our global competitiveness”, TIA’s CEO Rebecca Ingram said in a statement, highlighting that, with the recent 60% increase in visa costs, travellers will have to spend around NZD $500 (€280) to enter the country, more than double the cost of Canada, which is around NZD $220 (€123) per person, according to TIA, and 66% more than Australia – around NZD $300 (€168) per person.
Airline connectivity isn’t a nice to have for a country at the bottom of the world – it’s essential.
Rebecca Ingram, TIA CEO
Along with TIA, the International Air Transport Association (IATA) has also condemned the government’s decision to raise the IVL, stressing that the recovery of the New Zealand aviation market currently lags behind major countries such as Australia, Canada, France, Spain, the UK and the US, which have all either recovered to pre-pandemic passenger levels or will achieve full recovery in 2024.
“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”, Dr. Xie Xingquan, IATA’s Regional Vice President for North Asia and Asia-Pacific, echoed Ingram’s concerns.
Moreover, both TIA and IATA have noted that, during public consultations on changing the levy, they had urged the government not to increase it. “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 that the government’s own analysis had found that more than three times of economic activity will be removed from the country for every dollar generated from additional IVL revenue.
