High border tax for visitors

UPDATED: Tourism coalition claims government downplaying negative impacts of border clearance levy

EARLIER: The government has announced a higher border tax for all visitors arriving in New Zealand than first suggested.

This is despite tourism industry calls for it to be scrapped altogether.

The levy, which comes into effect in January, will be $18.76 + GST taking it to $21.57 for air travellers and those arriving by sea on private craft and $22.80 + GST ($26.22) for cruise passengers. The new tax comes on top of existing airport charges.

A public consultation document on the tax originally suggested the rate could be between $15.20 to $15.90 (GST exclusive) for arriving air passengers and $19 to $19.70 for arriving cruise ship travellers.

Primary Industries Minister Nathan Guy and Customs Minister Nicky Wagner say the higher tax for cruise passengers reflects the additional biosecurity assessments required at ports.

Exemptions include children under two, air and cruise crew, transit passengers, the military, government crisis workers, and anyone who pays for a ticket to travel in the next year before the levy comes in on January 1.

A redacted Cabinet paper on the tax shows the exemptions amount to nearly $64 million a year in foregone revenue.

It says spreading the full cost recovery of processing passengers for biosecurity and customs purposes across those left paying would mean levy rates of $18.76 for air and other travel and $30.85 for cruise travel.

The paper says another option is the Crown absorbing the cost of $2.84 million cost of capping the cruise rate at $22.80 for 30 months and then introducing full cost recovery on July 1, 2018.

The tax will help pay for increased biosecurity checks at the border, which have previously been funded by government.

The tourism industry wanted the tax scrapped, or at least delayed, until more detailed analysis on its impact could be carried out.

A Sapere report commissioned by the Ministry for Primary Industries on the potential levy impact on travellers from seven key markets found it could reduce visitor numbers by between 11,000 and 56,000 a year or up to 2.4% on the forecast tourism growth rate of 5.4% and cut their expenditure by $51 million or 0.9% compared to current forecasts. The report says it will be a one-off impact in the first year of implementation rather than on-going.

Mr Guy says the government has listened carefully to the concerns of the travel industry and stakeholders, and "this has informed the design of the levy.”

It will be collected by airlines and cruise operators when tickets are purchased and passed on to customs, while travellers on private aircraft and yachts arriving in New Zealand, who account for just 1% of all travellers, will have to pay customs directly when coming and going.

Mr Guy says the levy will cover the border clearance costs for the increasing volumes of arriving and departing passengers, which is rising by 3.5-4% a year.

"All travellers are a risk as they can inadvertently carry 'hitchhiker' pests or prohibited items with them. The levy will allow border activities to respond to future demand and create a more sustainable platform for border risk management services," he says.

Ms Wagner says passenger volumes are forecast to increase from 10.1 million in 2014 to 13.3 million by 2018/19.

The new tax is set for 30 months before it will be reviewed.

Ms Wagner says the levy is low compared with other countries - Australia has an $A55 passenger charge and the United Kingdom has a £71 long-haul passenger charge, for example.

(BusinessDesk)