New Zealand's tourism head hints at levy increase for international visitors

With just over a month until New Zealand reopens its borders to vaccinated visitors from visa waiver countries, including the U.S., leaders there are mulling changes that could mean a higher price to pay for tourists.

During a speech Friday to the University of Otago Tourism Policy School, New Zealand Tourism Minister Stuart Nash hinted at a price hike for the fee international visitors have paid to visit the country since the fall of 2019.

"Our international visitors must contribute their fair share," said Nash just before commenting on the International Visitor Conservation and Tourism Levy that currently charges visitors from most other countries 35 New Zealand dollars (about $24).

What is the IVL?

The IVL went into effect several months before the start of the COVID-19 pandemic, which prompted the yearslong closure of New Zealand's borders.

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Generally, international visitors must pay it when they apply for an Electronic Travel Authority, the country's border security mechanism. Permanent residents are exempt, as are visitors from certain South Pacific islands and, notably, Australia, whose residents represented about 40% of international visitors prior to the pandemic, Nash said.

When New Zealand announced the IVL in 2019, leaders said it was supposed to contribute to long-term sustainability of tourism, including protecting the environment. This came at a time when the country was seeing dramatic increases in tourists each year -- 8% in 2018. Leaders predicted by 2024, visitors might exceed the country's population.

Why increase the IVL?

New Zealand's tourism industry is hurting, Nash acknowledged in his speech Friday. He defended the country's decision to close its borders during the pandemic. However, the move effectively cut off tourism, which delivers billions of dollars to New Zealand's economy each year and employs close to a tenth of the nation's workforce.

Related: 9 reasons New Zealand should be on your bucket list

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The pandemic has led to the government spending billions to keep tourism afloat over the last two years.

Even as Nash acknowledged the "immense" impact international visitors have on New Zealand's economy, he also expressed a hope that pre-pandemic tourism trends would not resume.

"We're unlikely to see an immediate return to 2019 levels, but nor should we want to," Nash said. "It was unsustainable."

Nash went on to say the IVL "has a major role to play" in the country's post-pandemic tourism strategy. He did not explicitly say what type of price increase he would like to see when it comes to the IVL, but clearly indicated he would like to see it rise.

"I think most of us could agree that [NZ$35] was fine when it first came in, but it is not sustainable in the long term if we are to meet the expectations of visitors for world-class infrastructure and facilities," he said, adding that the current price point for the IVL was viewed as a "first step."

Nash said he's "continuing to look" at the IVL. However, he pointed out there are no immediate changes planned, and the country's government has yet to make any decisions on the fee.