Tourism industry worried about levy increase

New proposals which could cause a massive increase in charges for all travellers to and from New Zealand are highly troubling and premature, said Tourism Industry Aotearoa (TIA).

The government has told the New Zealand Customs Service and the Ministry for Primary Industries to review options for a full recovery of the bordering processing levy (BPL) introduced in 2016. The levy is used to fund customs and biosecurity services provided for all passengers arriving and departing New Zealand, including Kiwis.

TIA Chief Executive Chris Roberts said the limitations of the cost recovery model were exposed with COVID causing border closures. “With a 98 percent reduction in travellers, the levy income dried up,” said Roberts. The government had to provide $186m to Customs and MPI to reduce the funding deficit incurred up to the end of this month.

The current BPL is $20.11 incl GST for air passengers and $21.96 incl GST for cruise passengers. The consultation document released by Customs and MPI proposes options ranging from no change to increasing the levy from December 2021 to $160.76 incl GST per air passenger and $70.21 incl GST for cruise passengers.

Since the COVID pandemic eliminated international tourism, Roberts said it is “definitely not the right time” to increase travel costs, especially with other financial pressures at the border. Airways, Aviation Security, Civil Aviation Authority and international airports are also challenged with recovering costs across low levels of international travel.

“We risk…imposing a significant handbrake on reviving our visitor economy,” said Roberts.

TIA said the BPL should remain as it is for now. Two options proposed delaying the levy increase until September 2023. If there is to be a return to full cost recovery model after that time, it needs to be carefully monitored to reflect the expected gradual recovery of international travel over the next five years.