Why is New Zealand introducing a tourist tax?

By | Category: Travel tips & opinions

As I mentioned on Saturday, the New Zealand government is planning a tax on tourists visiting from outside Australia and the Pacific Rim forum countries.

The tourism minister, Kelvin Davis, feels that the effect on tourist numbers will be minimal whilst the opposition Nationalist Party says that it will make New Zealand a less attractive destination.

As countries around the world look to remove more cash from travellers and tourists, New Zealand has actually been clever in the administration of this tax.

The biggest group of tourists to the country come from Australia which won’t be affected. The 200,000 or so British tourists (out of about 4.5 million visitors) who visit the country will also not be put off because they are already paying a substantial sum to visit the country. If they are prepared to spend this amount then another £13-£16 isn’t going to matter one way or another because that represents 1.5-2% of what they were going to spend anyway just on the flights. Add hotels – unless they are staying with friends or relatives as some will –  and spending money and the tax will probably only equal about half of on per cent of what travellers will spend.

That New Zealand has ring fenced its closest neighbours means that the bulk of visitors will be untaxed. Only those making substantial journeys of about 9 hours or more will be affected. The lucrative Chinese market won’t be concerned by the extra sum and I doubt that other Asian visitors will be concerned. Visitors from the United States make up the third largest group of visitors and they will be unconcerned by a small hike either. Compared to the bed taxes they pay when they visit other US cities, the tax percentage here is insignificant.

But there is a less highlighted hit on tourists. All visitors will have to obtain an electronic visa (about £4.70) and there is also, according to a story by Grant Bradley in the NZ Herald, a border clearance levy of about £1.55 on everyone. How much will this cost to administer?

Given that the tax is so small and the government estimates that the tax will generate the equivalent of between £32-42 million is it worth the negative publicity that taxes always bring? Tax revenue for the country in the current fiscal year is expected to be about the equivalent of £42 billion so raising 0.1% of it by taxing overseas visitors seems hardly worthwhile. You could raise more by slapping a tax on plastic packaging and with probably fewer critical headlines.

Could it be that taxing non-voters is just  a trendy and easy thing to do?

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