There has been much talk about whether and how international visitors could contribute more to our country.
There’s no doubt that New Zealand’s economy needs tourism – it’s one of our two biggest exports and we believe it can contribute richly to what we value.
This issue came into focus with a recent five-year review of the International Visitor Levy. Currently set at $35, the levy is paid along with other charges at the border by most international visitors.
The public was asked for feedback on whether this levy should be $35, $50, $70 or $100. Recognising the cost of inflation, TIA is more comfortable with the $50 option, but with caution.
Raising the IVL is a balancing act because of other costs at the border, several of which are also under review. It is important that New Zealand, as a distant destination for most, is not priced out of consideration.
Data shows that international visitors are more than paying their way. In the year to March 2023, tourism directly and indirectly generated about $22.1 billion for the economy (GDP) and international visitors contributed $1b in GST. Tourism is the only export sector that pays GST.
The IVL is a comparatively small but meaningful revenue stream at $80m per annum. It is split between tourism and conservation, with the intention of taking pressure off both sectors, and enabling infrastructure investment. Introduced in late 2019, it’s fair to say that it hasn’t really been able to find its groove.
The industry cares about the IVL and wants it to be spent in a way that’s transparent, solves problems and benefits New Zealand.
And this brings me to the bigger picture - a careful consideration of the wider tourism funding situation.
Tourism has funding gaps that cannot be met through individual businesses or small ratepayer bases. Many of these needs are shared with the community and sit with local government, like infrastructure or implementing destination management plans or major events attraction.
Others relate to the industry, such as deep data and research, workforce development, climate adaptation and mitigation and building business capability.
The IVL is an important component in helping to meet these needs, but it is not the only approach we should consider.
Currently we have a system where the funds generated by tourism are made at a national level (GST), and the costs are borne locally.
There have been calls for localised levies to ensure funding gets to where it’s needed. We believe in a national solution which directly benefits the places our visitors visit and enjoy, and which involves industry in its governance, the preparation of its investment plan, distribution of funds and auditing of its outcomes.
The industry is motivated to work with the Government and local government on solving this long-standing issue and impediment to progress by looking for new revenue sources.
Our recommendation is to investigate the establishment of a new national tourism levy as a transparent, equitable and efficient mechanism to raise needed revenue.
We value the role of the IVL. However, using it as a panacea for all tourism funding requirements, and raising it to a high level, is not the answer.
The tourism industry and the Government are on the same page in wanting to achieve a thriving and prosperous industry that broadly benefits Aotearoa New Zealand. To get to this place, we must act. The industry must grow in a balanced way and by design, not by default. A key unlock here is distributed funding.
Now is not the time to slip into a passive mode of tourism. We are striving for something better.
