New Zealand’s decision to triple its tourist tax – from NZ$35 to NZ$100 – will make the country more expensive and less attractive for international travellers, the International Air Transport Association (IATA) has warned.
The increase in the International Visitor Conservation and Tourism Levy (IVL) – from October 1 – is aimed at boosting New Zealand’s economic growth and ensuring visitors “contribute to public services and high-quality experiences,” the country’s government said.
However, the move has been heavily criticised given that – unlike many places in the world with tourist taxes – New Zealand is already expensive to travel to and takes a long time to reach.
“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.
The recovery of the New Zealand aviation market currently lags behind major markets such as Australia, Canada, France, Spain, the UK, and the US, according to IATA.
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.
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 Dr. Xie.
Dr. Xie also noted that 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.”
