4. The tourism levy's hidden fishhooks

International visitors will have to pay more to visit New Zealand in changes proposed by the Government. Photo: David Williams

The Government has announced a levy for international tourists, but has also snuck in a proposal that would increase costs for New Zealand citizens as well. Shane Cowlishaw reports.

A large chunk of tourists visiting New Zealand will soon be paying an extra tax for the privilege.

The new visitor levy, to be set between $25-35, was announced by Tourism Minister Kelvin Davis and will likely be collected online through a an Electronic Travel Authority (ETA) system.

Australians and most Pacific Islanders will be exempt, alongside children under two.

The changes will hit people on visitor visas hardest, with individuals paying up to an extra $76 while a person from a visa-waiver country will pay $39 instead of nothing.

While the visitor levy grabbed headlines and dominated press releases, further changes were also quietly announced.

Many visa fees are set to be hiked, with work visa application costs rising more than 50 per cent to plug a $50 million hole at Immigration New Zealand.

The Border Clearance Levy, which all travellers including New Zealanders pay, is also set to rise by $3 per traveller.

Reaction to the international levy has been cautiously optimistic, with a general consensus that more money was needed to both cater for increased tourist numbers and protect the environment.

The number of visitors to New Zealand is expected to increase to 5.1 million by 2025.

Chris Roberts, chief executive of Tourism Industry Aotearoa, said no industry considered a tax on its members and customers a good thing but if the levy was spent wisely then it could be beneficial.

“The best thing that can happen is the collection is going to where it’s most needed, there’s clearly hot spots where there’s pressure on infrastructure, if this funding goes to the places where it will do the most good then the international visitor will see they are contributing to their experience while in New Zealand.”

Professor Karen Smith, head of Victoria University’s tourism group, agreed and said collecting the levy through an ETA seemed like the most cost-effective and simplest option.

The extra costs would not have an impact on tourist numbers, but it was essential the levy be used in areas that required desperate investment, she said.

“I think this is the really key thing that isn’t clear, where the money will be invested. One thing I think is quite important is this shouldn’t be seen as an alternative way to fund tourism and conservation.”

Consultation on the proposals, including how the money should be spent, will close on July 15.

A looming $50m hole

A review into immigration fees and levies was also announced, with the standout being a 54 per cent increase in the price of a work visa.

That would see the cost for a standard work visa jump from $298 to $495.

Immigration levies for people moving to New Zealand will also rise by 43 per cent, while student visas, group visitor visas and business visas will drop in cost.

Immigration Minister Iain Lees-Galloway announced the review at the bottom of a press release about the ETA, but details behind the large fee increase were buried in a cabinet paper.

It revealed that the cost of processing an avalanche of visas had led to an “unsustainable deficit” of $50m, rising from $20m in 2016/17.

The paper warned that if the proposed fee hikes were implemented the account could return to zero in three years, but if they were not the Government would have to bail Immigration NZ out.

While some businesses may be concerned that the work visa fee increase will put off workers from choosing to come to New Zealand, the cabinet paper noted officials believed the change would have minimal effect.

Professor Paul Spoonley, of Massey University, agreed and said most skilled migrants were experienced and reasonably well off.

Last year, Immigration NZ had centralised its visa processing system by reducing the amount of overseas staff and boosting its online system.

But the huge increase in arrivals since 2015, driven by New Zealand’s strong economy and attractive environment, had likely caught them by surprise and the fee increase was a way to “balance the books”, he said.

“The issue is we’ve got incredibly high numbers of migrants, about 130,000 permanent arrivals each year and about 200,000 temporary work and study visa arrivals each year. At the moment the volume is so high that it’s really putting the processing of applications under enormous pressure."

Border clearance levy increase proposed

A plan to wipe out an imminent reduction to a border travel tax was buried even deeper in the documents.

The Border Clearance Levy was introduced in 2016 to cover the cost of Customs and MPI border inspections.

It is paid by all air and cruise ship passengers, including New Zealand citizens.

From July 1, the levy is set to drop by about $3 to $18.73 for air travellers and $22.82 for cruise passengers after a surplus was collected.

But the Government is proposing to reverse that so Immigration NZ could cover the costs it incurred at the border as well.

In the cabinet paper referred to above, the importance of ensuring passengers were not being pinged twice for work done by the agencies was stressed.

Marc Piercey, Immigration NZ’s communications manager, said the funding would cover work in screening passengers and training airlines to ensure they were compliant with immigration law.

An estimated $2.98 increase would be added to the airline passengers' levy, but the final cost could change if it was adopted, he said.