Government sets higher rate than indicated for new border clearance levy
By Fiona Rotherham
Oct. 14 (BusinessDesk) - The government has announced a higher border clearance levy for all visitors arriving in New Zealand than first suggested despite tourism industry calls for it to be scrapped altogether.
The levy, which comes into effect in January, will be $18.76 plus goods and services tax ($21.57) for air travellers and those arriving by sea on private craft and $22.80 plus GST ($26.22) for cruise passengers.
A public consultation document on the levy originally suggested the rate could be between $15.20 to $15.90 (GST exclusive) for arriving air passengers, $19 to $19.70 for arriving cruise ship travellers. The new tax comes on top of existing airport charges.
Primary Industries Minister Nathan Guy and Customs Minister Nicky Wagner said the higher rate 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 paid for a ticket to travel in the next year before the levy comes in on Jan. 1.
A redacted Cabinet paper on the levy showed the exemptions amounted to nearly $64 million a year in foregone revenue. It said 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. It said another option was 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 levy will help pay for increased biosecurity checks at the border, which have previously been funded by government.
The tourism industry wanted the levy 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 percent on the forecast tourism growth rate of 5.4 percent and cut their expenditure by $51 million or 0.9 percent compared to current forecasts. The report said it would be a one-off impact in the first year of implementation rather than on-going.
Guy said the government had 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 percent of all travellers, will have to pay Customs directly when coming and going.
Guy said the levy will cover the border clearance costs for the increasing volumes of arriving and departing passengers which is rising by 3.5 percent to 4 percent a year.
“All travellers are a risk as they could 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 said.
Wagner said passenger volumes are forecast to increase from 10.1 million in 2014 to 13.3 million by 2018/19.
The levy rate is set for 30 months before it will be reviewed.
Wagner said the levy is low compared with other countries – Australia has a A$55 passenger charge and the United Kingdom has a 71 pound long-haul passenger charge, for example.