New Zealand’s tourism industry, a critical pillar of the nation’s economy, is facing a potential crisis as the government considers introducing a $100 International Visitor Levy (IVL). This proposal, currently under consultation, could devastate the nation’s fragile tourism sector, risking the loss of $273 million in visitor spending and deterring thousands of potential tourists from visiting the country.

Tourism Industry Aotearoa (TIA), the leading voice in the sector, has sounded the alarm over the potential consequences of such a steep increase in the IVL. According to TIA’s Chief Executive, Rebecca Ingram, the ramifications could be severe, with an estimated 48,000 fewer visitors arriving in New Zealand if the levy were raised to $100. This reduction in visitor numbers would strain the industry and significantly threaten New Zealand’s overall economic recovery.

“The tourism industry is still on the mend, with recovery levels hovering around 80%. At this critical juncture, introducing a $100 IVL could create a substantial barrier for international visitors, further delaying our return to pre-pandemic growth levels,” Ingram stated. “The projected loss of $273 million in spending from international tourists is not a figure we can afford to overlook.”

The Financial Stakes: A Sector in Peril

Tourism Industry Aotearoa (TIA) Chief Executive Rebecca Ingram.

The IVL, initially set at $35, was introduced to fund essential tourism infrastructure and conservation projects. However, the government’s consideration of a significant increase has raised concerns across the tourism sector. TIA’s analysis highlights the potential dangers of such a move, particularly in light of recent increases to immigration visa and levy charges, coupled with budget cuts to Tourism New Zealand.

“In an increasingly competitive global market, New Zealand must remain an attractive destination for high-quality visitors. We are deeply concerned about the cumulative effect of escalating fees, which we believe will have a material impact on visitor numbers, a vital workforce, and the economic contributions they bring,” Ingram added.

The financial stakes are high. In the fiscal year ending March 2023, international tourism generated approximately $22.1 billion in GDP for New Zealand, with international visitors contributing $1 billion in GST alone. Tourism is unique among export sectors in its contribution to GST, and it remains a vital component of the nation’s economic engine.

A Wider Conversation on Tourism Funding

While TIA acknowledges the need to fund tourism-related infrastructure, the organization argues that a sharp increase in the IVL is not the answer. While an important tool, the IVL is seen as a blunt instrument that may not address the underlying issues in tourism funding.

“The IVL is only one part of the solution,” Ingram noted. “Using it as a catch-all for all tourism funding requirements and raising it to such a high level does not solve the problem. It fails to address the need for local councils and communities to invest in the infrastructure that supports tourism.”

TIA urges the government to consider more sophisticated solutions allowing additional revenue collection without deterring visitors. The industry is prepared to work closely with central and local governments to explore alternative funding mechanisms that do not impose a significant upfront cost on potential visitors.

The Road Ahead: Collaboration for Sustainable Solutions

The tourism industry is at a crossroads and its future hinges on the government’s decisions in the coming months. TIA advocates for a balanced approach that considers the economic benefits of international visitors and the need for sustainable tourism funding.

“We are committed to finding a solution that balances the needs of the industry with the government’s funding requirements. We believe there are more elegant solutions available—options that would allow visitors to contribute additional revenue as they travel through the country, rather than imposing a prohibitive upfront fee,” Ingram concluded.

As the government deliberates on the future of the IVL, the tourism industry remains hopeful that a collaborative approach will prevail. The stakes are clear: New Zealand cannot afford to alienate international visitors when the economy needs them the most. The tourism industry stands ready to engage in meaningful dialogue, ensuring New Zealand remains a top destination for travellers worldwide.

Written by: Karuna Johnson

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