New Zealand’s recent decision to significantly increase the tourist arrival tax for international visitors has sparked concerns within the local tourism industry, with fears that the move could undermine the country’s global competitiveness.
Background
In a statement released on Tuesday (September 3), the New Zealand government announced that the International Visitor Conservation and Tourism Levy (IVCT) will be tripled from NZD 35 to NZD 100 (approximately USD 62) starting October 1. The government justified the increase by stating that it aims to ensure tourists contribute to public services and high-quality experiences during their stay in the country.
Industry Concerns
The news quickly became a headline in international media and drew criticism from major players in New Zealand’s tourism sector. Industry leaders argue that the higher fee acts as a barrier, making travel to New Zealand very expensive for tourists.
Rebecca Ingram, CEO of the New Zealand Tourism Industry Association, expressed concerns that the increased fee would dampen tourist enthusiasm, particularly as the industry is still recovering from the stringent border closures implemented during the COVID-19 pandemic. New Zealand’s tourism recovery is lagging behind other parts of the world, and this will further weaken our global competitiveness, Ingram stated.
Exemptions and Impact
The increased tax will not apply to Australians and most Pacific Island nations. The largest markets affected by the tax hike include the United States, China, the United Kingdom, India, South Korea, and Germany, with visitors from these countries totaling 1 million last year.
New Zealand’s tourism industry has been a significant contributor to the country’s economy, accounting for 3.5% of the GDP with a tourism export income of NZD 14.96 billion in the year ending June 30. However, this figure is 5% lower than pre-pandemic levels, and the current number of tourists is only about 80% of pre-border closure levels.
Government Perspective
The government maintains that the fee is competitive and believes that New Zealand will continue to be seen as an attractive tourist destination. Tourism Minister Matt Doocey stated that the tax ensures international visitors contribute to high-value conservation areas and projects, such as supporting biodiversity in national parks.
Global Context
New Zealand is not the only country to impose a tourism tax. Other nations, including Indonesia, Spain, France, Austria, Croatia, Costa Rica, Iceland, and Italy, also charge tourists. In most cases, the tax is included in accommodation, visa, or airfare costs.
Additional Measures
In addition to the tourist arrival tax hike, the New Zealand government has also increased visa fees and proposed higher charges for regional airports. Billie Moore, CEO of the New Zealand Airport Authority, described these measures as a triple whammy for an industry that is striving to recover.
Conclusion
While the New Zealand government aims to ensure that international tourists contribute to the country’s public services and environmental conservation, the tourism industry fears that the increased tax could have a detrimental effect on the country’s global competitiveness. As New Zealand continues to rebuild its tourism sector in the post-pandemic era, striking a balance between economic recovery and sustainable tourism practices remains a significant challenge.
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