Tourist levy could see 20,000 fewer visitors spending $70m elsewhere

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New taxes from $25 to $35 for tourists visiting New Zealand - kicking in from as early as the middle of 2019 - could see up to 20,000 fewer visitors and a loss of $70m in money spent here, according to official Government advice.

But the taxes would generate up to $80m a year for tourism and conservation infrastructure.

The analysis is in a paper from the Ministry of Business, Innovation, and Employment that was released under the radar last week, along with Cabinet papers about a new Electronic Travel Authority (ETA) and changes to immigration fees.

The Government has been looking at introducing an international visitor levy of between $25 and $35, and an ETA fee of between $9 and $12.50 to pre-approve visitors before they arrive.

The MBIE analysis looked at the impact of a $25 levy and $9 ETA fee, meaning some visitors would pay $34 to visit New Zealand, including from South Korea, the US, the UK and Germany.

"Our estimates of the possible impacts in 2021, relative to the MBIE forecast for that year, are 14,983 fewer visitors, $51 million reduced spending by visitors while in New Zealand, and a $42 million smaller contribution to GDP by the tourism sector," the paper says.

A $30 levy would see 17,756 fewer tourists and $60m in lost spending, and this would rise to 20,529 fewer tourists and almost $70m in lost spending for a levy of $35.

Immigration Minister Iain Lees-Galloway is aiming to finalise the system, including the level of fees, in March.

According to a Cabinet paper, he is pushing for an out-of-cycle budget approval so the ETA fee and visitor levy can be ready for collection by the second half of 2019 for air passengers and crew, and in 2020 for cruise passengers and crew.

Pushing it to Budget 2019 would delay implementation until 2021, forgoing about $80m in lost tax revenue.

The original cost estimate for setting up an ETA was $16.5m, and the paper notes that this has increased - but the new estimate is redacted.

An ETA would mean visitors from countries that have a visa-waiver agreement with New Zealand would have to go online to get permission to travel here before arriving.

ETA approval would take up to 72 hours and would last for five years for air and cruise crew, and two years for air and cruise passengers.

New Zealand and Australian citizens would not need ETA approval.

Australians would also be exempt from a visitor levy due to the freedom of movement policy between Australia and New Zealand.

The paper showed that feedback for the proposals from stakeholders was supportive, though some concerns were raised about negative impacts on travellers or carriers.

In June, Tourism Minister Kelvin Davis said the $57m to $80m a year from the visitor levy would fund tourism infrastructure and conservation.

In a different Cabinet paper released last week, Lees-Galloway supported a raft of changes to immigration fees including:

• A 54 per cent increase - from $355 to $547 - for work visa fees; Seasonal Employment visas and Working Holiday visas would rise only 10 per cent
• A 6.5 per cent decrease in student visa fees
• A 45 per cent decrease for group visitor visas fees
• Scrapping the $20 discount for student, work and visitor visas online applications
• A 10 per cent rise for all other visa category fees; a visitor visa would increase from $151 to $190 (includes removal of online discount)
• A 43 per cent increase in all immigration levy rates; from $580 for most migrants to $830.
• A 20 per cent rise in employer accreditation fees
• Scrapping a proposal for a $2.98 Border Clearance Levy to recover border costs for Immigration NZ

Lees-Galloway noted concern from Pasifika communities and said Pasifika migrants would continue to pay less than others; Pasifika visitors would pay a $150 visa fee instead of the $190 fee that would apply to other visitors.

The changes are expected to raise $160m over the next five years.