New Zealand has announced a significant hike in its tourism tax, which is set to nearly triple by October.
The move represents a major blow to holidaymakers who will have to pay up to NZ$100 £47.20 for the International Visitor Conservation and Tourism Levy.
This is an increase from NZ$35 (£16.52), meaning the cost of entering the country will almost triple for foreign visitors.
The government has justified the steep hike by arguing that it will support economic growth and ensure travellers contribute to public services.
The tax hike serves a blow to holidaymakers
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The decision has sparked concerns within the tourism industry, however, with the country’s independent tourism body, Aotearoa, arguing the higher could deter potential visitors.
Rebecca Ingram, the association’s chief executive, stated: “New Zealand’s tourism recovery is falling behind the rest of the world, and this will further dent our global competitiveness.
Tourism Minister Matt Doocey defended the decision on the basis that the NZ$100 tourism levy makes up less than three per cent of what the average tourism spends in the country."
He said: “I remain confident New Zealand will continue to be seen as an attractive visitor destination by many around the world.”
The minister also pointed out that the levy will ensure “international visitors contribute to high-value conservations areas and projects, such as supporting biodiversity in national parks”.
According to Doocey, the plan confirms that “the government is serious about enabling the tourism sector to grow as part of [its] overall goal of doubling exports in 10 years”.
He shared that citizens were consulted on the increase in a survey that revealed 93 per cent of respondents support raising the levy.
“International tourism plays a hugely important role in the New Zealand economy, with international visitors spending over $11billion in the year ending March 2024."
The International Air Transport Association (IATA) expressed disappointment with the government’s decision to increase the levy was disappointing.
“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,” said Dr Xie Xingquan, IATA’s regional vice-president for North Asian and Asia-Pacific.
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The tax hike serves a blow to holidaymakers
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“These changes make travel to New Zealand more expensive and less attractive and could further delay the recovery numbers beyond 2026,” he said.
The tourism tax hike comes as New Zealand faces higher costs of living.
"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," added Dr Xingquan.
"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."