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Why are border processing levies increasing?

From 1 December 2021, Customs and MPI will return to fully recovering the cost of providing border processing services for travellers. This will ensure that travellers fund the cost of the activities that Customs and MPI carry out to manage the risks posed by their travel.

Border processing levies will increase from $17.49 to $38.03 per non-cruise traveller, and from $18.31 to $26.61 per cruise traveller (excluding GST).

Why are rates increasing now rather than after borders fully reopen?

Rates are increasing to ensure that those who are travelling meet the costs associated with their travel. It would be unfair to continue to under-charge current travellers and to ask future travellers or taxpayers to fund these costs.

What impact will the changes have on travellers, and the travel and tourism industries?

The increases will have negligible impact on travel decisions because they are minimal compared to the overall costs of travel. There will also be minimal impact on the travel or tourism industries.

What will happen if there are more, or fewer, travellers than Customs and MPI estimated?

The number of travellers will be affected by future events such as the implementation of the Government’s plans for the phased reopening of New Zealand’s borders.

Customs and MPI will actively monitor the levies and will propose adjustments as necessary to keep on track to recover costs. Modelling shows that any subsequent adjustments to the new levy rates are likely to be small.

What technical changes are being made to the levy orders?

There are some technical amendments to improve the operation of the levy orders.

Maximum rates (caps)

The levy orders have maximum rates (caps) up to which the chief executives of Customs and MPI can adjust the levy rates if necessary, after consulting with industry representatives. The caps will be set five percent above the levy rates. This provides Customs and MPI with a small margin to adjust levy rates if necessary, while any significant increases would need to be considered by Ministers.

Allowing the chief executives of Customs and MPI to start a new levy period

The current levy orders allow Customs and MPI to adjust levy rates to avoid over-recovering or under-recovering costs, but these adjusted rates would not fully recover the surpluses or deficits. The amendment will enable Customs and MPI to start a new levy period and set rates that fully recover costs including any surpluses or deficits. This will result in more stable levy rates.

Allowing the Director-General of MPI to set the duration of levy periods

Currently, MPI’s levy periods must start on 1 July and end on 30 June. The amendment will allow the Director-General of MPI to set the duration of levy periods. This will enable MPI to deal with unforeseen circumstances such as those related to COVID-19. The next levy period will start on 1 December 2021 and end on 30 November 2024. The amendment mirrors clauses in the Customs and Excise (Border Processing Levy) Order 2015.

What are the transitional arrangements for implementing the new rates?

There will be transitional arrangements to ensure that airlines do not bear the cost of the levy increase for tickets they have already sold. Customs and MPI will pay airlines the difference between the current and new levy rates for tickets that travellers had already purchased before the new levy rates were announced, for travel taken within six months of the new levy rates being announced. This ensures that airlines have an appropriate opportunity to incorporate levy rates in ticket prices.

What consultation was undertaken?

Customs and MPI carried out public consultation in June and July 2021, including consultation with representatives of the airline, cruise line and tourism industries.

Why should travellers pay for border processing services?

People travel for many reasons such as for business, holiday or visiting friends and family. Border processing services mitigate the threats and risks posed by travellers, including biosecurity threats, prohibited goods and health risks, while facilitating secure and efficient travel. Charging travellers for the costs they give rise to is fair, and is consistent with guidance issued by the Treasury and the Controller and Auditor-General. This policy of cost recovery of border processing services was in place prior to COVID-19.

What are Customs and MPI doing to prepare for the phased reopening of New Zealand’s borders?

Customs and MPI are exploring ways to process travellers during the reopening of New Zealand’s borders. For example, officials are exploring a traveller health declaration system to enable travellers to show their COVID-19 vaccination and testing status.

On 12 August 2021, the Government announced its plan to reconnect New Zealanders to the world. Final decisions on when and how the border will reopen have not yet been made by the Government.

For more information, read the Prime Minister’s media statement and speech on the Beehive website.