Proposal for increasing the IVL
Based on the current amount of $35, the IVL is forecast to raise around $80 million per annum . This amount is insufficient to meet the needs of our tourism or conservation sectors as we look to grow tourism to benefit visitors and New Zealanders.
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The Government acknowledges that worldwide travel is extremely competitive. New Zealand is a long way from many markets and expensive to travel to, so reaching pre-COVID arrival numbers may take time.
The Government has considered a range of factors, such as the effects of inflation, similar charges in other destinations and other costs to visitors, to arrive at the following 4 options for raising the IVL:
- The IVL remains at $35 per person (status quo).
- The IVL increases by $15 per person from $35 to $50 per person.
- The IVL increases by $35 per person from $35 to $70 per person.
- The IVL increases by $65 per person from $35 to $100 per person.
As shown in Table 1 below, the Government estimates that the increased revenue from an increase in the IVL has the potential to be significant. A 2% margin of error recognises that IVL revenue fluctuates with international visitor numbers, and figures are rounded to the nearest million:
Table 1: Estimated IVL revenue based on forecast international visitor arrivals – 2024 to 2026
(Arrivals are forecast on actual arrivals up until 30 June 2023.)
| IVL scenarios | Total estimated IVL revenue | Estimated additional annual revenue with +/- 10% variation in total visitor numbers paying the IVL |
|---|---|---|
| Status quo IVL remains $35 |
~ $80 million | ~ (-$8 million) to ~ $8 million |
| Option 1 IVL is increased by $15 to $50 |
~ $115 million | ~ $24 million to ~ $47 million |
| Option 2 IVL is increased by $35 to $70 |
~ $161 million | ~ $65 million to ~ $97 million |
| Option 3 IVL is increased by $65 to $100 |
~ $230 million | ~ $127 million to ~ $173 million |
An increase to the IVL cannot be considered in isolation, we need to consider how cumulative price increases impact visitor demand
New Zealand is a premium and often expensive destination for many of our international markets, and any additional cost may impact our competitiveness against similar destinations. There is a risk that increasing the IVL too much could slow growth in travel demand for more price-sensitive markets, or lead to visitors spending less while in New Zealand.
While the Government believes an increase in the IVL amount is unlikely to impact the volume of visitors to New Zealand significantly, there are a range of other costs associated with international travel. Some of these are market-driven, such as airfares, fuel cost, airport charges, and customer preference, and some relate to costs in other jurisdictions, such as border charges, transit costs, fees, and levies.
There is no up-to-date modelling available to provide an indication of the impact of these cumulative costs. However, a study from the United Kingdom[1] suggests that the responsiveness of demand to travel is low for moderate increases in visa rates, which may suggest a similar pattern for the IVL.
There have been increases in other border charges
Visitors to New Zealand face other border charges alongside the IVL, some of which have recently increased. When determining the attractiveness of New Zealand as a destination to visitors, consideration must also be given to these wider charges and whether they will also be rising.
Table 2 provides an overview of New Zealand’s current border charges, which should be considered alongside the IVL.
Table 2: New Zealand border fee and levy changes
| Responsible Agency/Organisation | Name of Charge | Price (Cruise Passengers) |
Price (Non-Cruise Passengers) |
Eligibility |
|---|---|---|---|---|
| NZ Customs Service | Border Processing Levy (arrival) | $11.48 (excluding GST)/$13.20 (including GST) per passenger | $16.59 per passenger (excluding GST/$19.08 (including GST) per passenger | Any person entering New Zealand. |
| NZ Customs Service | Border Processing Levy (departure) | $4.55 (excluding GST)/$5.23 (including GST) per passenger | $4.52 (excluding GST)/$5.20 (including GST) per passenger | Any person departing New Zealand. |
| Biosecurity NZ (MPI) | Border Processing Levy (arrival) | $10.58 (excluding GST)/$12.17 (including GST) per passenger. | $16.92 (excluding GST)/$19.46 (including GST) per passenger | Any person entering New Zealand. |
| Maritime NZ | Maritime Levies | Fees vary on vessel classification. Passenger capacity charges vary from $19.54 – $48.71 | n/a | Fees paid per vessel. Costs are passed to passengers in their ticket price. |
| Civil Aviation Authority | International Passenger Security Levy | n/a | $13.12 (excluding GST)/ $15.09 (including GST) per passenger. | Paid per departing international flight. Levied via airlines, costs are passed to passengers in their ticket price. |
| Civil Aviation Authority | Civil Aviation (Safety) Levy | n/a | $1.60 (excluding GST)/$1.84 (including GST) | Levied via airlines with costs passes to passengers in their ticket price. |
| Airport Passenger Charges | Passenger charges | n/a | Vary by airport, Auckland Airport fees: International and Transit Passenger Charge - $21.20 |
Any person arriving at, or transiting through, the airport from abroad. |
| Immigration New Zealand | Visa Fees and Levies | n/a | Visitor Visa currently $211 ($21 for the levy and $190 for the fee). | Non-New Zealand citizens seeking to travel to and enter New Zealand who are not from visa-waiver countries. |
A visitor from a non-visa waiver country entering New Zealand via Auckland Airport on a visitor visa would currently pay at least $315.43 in border charges and fees, including the IVL. This figure does not consider any relevant charges a visitor may face departing their country of origin or for countries they transit through.
There may still be indirect costs associated with COVID-19, such as travel insurance premiums, which are not considered. Worldwide inflationary pressures, fuel cost increases, and airport fees are also likely to have an impact on the cost of travel to and from New Zealand.
While the Government acknowledges these concerns, it has become clear that returning to a status quo tourism sector is not in the long-term interest of New Zealanders, our communities, our visitors, or our tourism operators.
International comparisons
New Zealand is one of many countries imposing border charges and fees, with many destinations increasing prices. For example, Venice recently introduced a ‘Daily Access Fee’ of €5 per person for day-trippers to the city[2].
Table 3 outlines fees charged in Australia. A visitor from a non-visa waiver country entering Australia via Melbourne Airport would pay at least A$320.82 (NZ$353.67)[3] in border charges and fees. This will rise to A$330.82 (NZ$364.70)[4] from 1 July 2024.
Table 3: Australia border fee and levy changes
| Name of Charge | Price (A$) | Eligibility |
|---|---|---|
| Passenger Services Charge | Vary by airport, Melbourne Airport fees: Domestic - $16.28 International - $64.32 |
Any person arriving at, departing from, or transiting through, an Australian airport. |
| Safety and Security Charge | $6.50 | Any person buying an air ticket. |
| Passenger Movement Charge (Departure Tax) | $60 (Rising to $70 from 1 July 2024) |
All persons departing for an overseas destination. |
| Visitor Visa | $190 | Non-Australian citizens seeking to travel to and enter Australia who are not from visa-waiver countries. |
| Total for International holiday maker (arrival and departure) | $320.82 | For example, a visitor from a non-visa waiver country entering and exiting Australia via Melbourne Airport. |
Questions for consultation
1. Do you prefer one option over the other? (select one)
a. Status quo at $35
b. An increase by
2. If the IVL does increase, what amount is your preferred option?
a. Increase by $15 to $50
b. Increase by $35 to $70
c. Increase by $65 to $100
3. Please explain the reasoning for your preferred option.
Footnotes
[1] Home Office (United Kingdom). (2020). A review of evidence relating to the elasticity of demand for visas in the UK.
[2] Pay the Venice Access Fee(external link) — Venice Access Fee website
[3] Conversion rate as at 6 May 2024
[4] Conversion rate as at 6 May 2024