Interpretation New Zealand

Ata mārie

As we discussed in last months blog the Government has now moved on introducing a proposed visitor levy.

There may not be much debate that such a solution is needed with international visitor arrivals hitting 3.7m last year, and forecast to top 5m by 2024, almost twice the number we welcomed in 2012.

As many of us are aware, such growth has resulted in congested roads, overcrowding at popular destinations, and overloaded sewage and water systems, all putting pressure on local council budgets.

The tourism industry argues that tourism raises (through GST) around $1.47 billion annually. The predicted income from the levy is not a lot (around $ 57-80 million a year)  and is certainly a lot less than the likely investment required to fix issues of around $ 150 million annually.

The issue gets further muddied with a recent report suggesting that on one hand the Government profits to the tune of $2.6b annually, while on the other some local authorities in tourism struggle to maintain essential services to ratepayers and visitors alike.

The muddy waters become even more turbid with bed tax proposals being supported by some large Councils. However these do not appear to be gaining Government support at either local or national levels. This potential source of funds may be resolved later this year when the Productivity Commission reports back on options for local government funding.

The key points of the current visitor levy proposal include:

* Most international visitors entering New Zealand for 12 months or less would be charged a levy, proposed to be between $25 to $35
* There would be some exemptions, most notably Australian citizens and permanent residents and people from most Pacific Island Forum countries
* The levy would be collected through visa fees and via the proposed Electronic Travel Authority process, also under consultation, for citizens of visa waiver countries
* The levy would collect around $57-80 million in its first year, depending on the rate, which will be split between tourism infrastructure and conservation activity.

The consultation on the International Visitor Conservation and Tourism Levy is open until July 15th . As an aside related consultation on the Electronic Travel Authority and fees and levies proposals are also open, find out about  both at MBIE.

It is likely that the proposed levy will come into effect in November.

In our view the levy is somewhat of a smokescreen. The tourism industry more than pays its way through GST and other fees. The $ 2.6 billion raised in this manner could easily be redistributed to fund infrastructure and development needs without the need for a levy or bed taxes.

It’s about cathedral thinking, something that successful governments have failed to build on with the visitor industry.

Decisions should be made now by the Government to invest monies raised by international visitors to facilitate the sustainable future of Aotearoa, particularly in the infrastructure and conservation fields.

Mā te wā