The issue and why we are consulting
The current amount of the International Visitor Conservation and Tourism Levy (IVL) is insufficient to address the costs associated with international tourism. The Government is seeking feedback on increasing the amount of the IVL and how revenue is invested to support managing the costs of international tourism.
On this page
Tourism is a critical part of the New Zealand economy
Visitors bring significant money into the New Zealand economy, and the sector provides jobs and investment opportunities. International visitors also expand our global reach through critical aviation links. Visitors often return home with a taste for New Zealand’s wine and food or with the goal of returning here to study, live or invest.
Evidence shows that visitor numbers are recovering following the effects of the COVID-19 pandemic. The UN World Tourism Organisation reports that international tourism reached 90% of pre-COVID levels worldwide in October 2023[1], with arrivals to New Zealand at year end February 2024 at 80% of peak visitor volumes in 2019[2].
Figure 1: Total international visitor arrivals to New Zealand
View chart table data
But tourism creates costs which the IVL cannot currently address.
However, international visitors also put pressure on New Zealand’s infrastructure, environment, and communities. This pressure causes costs and impacts which affect both visitors and residents. Currently, costs are covered primarily by New Zealand’s ratepayers and taxpayers, with visitors contributing through the IVL[3] and through GST on their purchases.[4]
Estimates in 2019 projected that the unfunded costs of international visitors were around $250 million per year. This comprised $100 to $150 million each year (shared between the private sector, local and central government) in costs associated with local infrastructure[5] and around $96 million of DOC’s expenditure.[6]
Visitors come to New Zealand for, amongst other things, our landscapes and scenery and for our safe and uncrowded locations.[7] Ongoing investment in tourism infrastructure and conservation is critical to ensure a high-quality visitor experience and the long-term sustainability of the tourism industry.
The Government is focused on rebuilding the economy and fiscal sustainability
The Government recognises the importance of the tourism sector to the economy, and the public conservation land and waters that many visitors are motivated to travel to New Zealand to experience. However, these priorities must be balanced against a range of other pressures and the realities of the current fiscal position. At present, the Crown invests significantly into tourism including international marketing through Tourism New Zealand (TNZ), investment into mixed-use infrastructure and support for conservation land and water. It is appropriate that the Crown continues to consider the balance of contributions made by taxpayers and international tourists to support these functions. This includes considering whether funds raised from levies can be used to support actions that would otherwise be funded by taxpayers.
The Government is consulting on increasing the IVL amount and how funding from the IVL is spent
At $35, the IVL does not generate enough funding to support the required level of ongoing investment needed to support communities to address the impacts of international visitors, especially those with low resident to visitor ratios, nor can it address the rising costs of goods and services. The Government believes too much additional funding is being provided from ratepayers and taxpayers. We are therefore seeking your views on the IVL amount and how that funding is spent across both tourism and conservation, and where applicable the wider economy.
Questions for consultation
1. Do you agree that current levels of IVL revenue (approximately $80 million) are not sufficient to address issues facing tourism and conservation?
a. Yes – Maybe – No – Not sure
2. Do you agree that the IVL should be used to address some of the costs for tourism and conservation currently funded by the Crown?
a. Yes – Maybe – No – Not sure
3. Please explain your views, including any additional information that would be useful.
Footnotes
[1] International Tourism to Reach Pre-Pandemic Levels in 2024(external link) — UN Tourism
[2] International travel: February 2024(external link) — Stats NZ
[3] The IVL can currently only be used to fund or contribute to the funding of conservation, infrastructure used for tourism (including the cost of operating the infrastructure), and other initiatives related to tourism.
[4] International visitors contributed $1.0bn through GST to year end March 2023. This revenue is invested across New Zealand.
Tourism satellite account: Year ended March 2023(external link) — Stats NZ
[5] Addressing New Zealand’s most pressing local tourism infrastructure needs [PDF 1.7MB](external link)
[6] Gross expenditure related to international visitors was $115.5m; $96m is the net amount taking account of contributions International Visitors make through GST and taxes paid by tourism businesses.
[7] Factor in Deciding to visit New Zealand - All Countries data(external link) — Tourism Evidence and Insights Centre (MBIE)