Why is New Zealand So Expensive?

Travelers to New Zealand are often surprised by how expensive it is. In fact, if you Google “Why is New Zealand so…..” the first auto suggestion is likely to be “expensive.”

Since I’m a New Zealand travel blogger, I thought I’d explain some of the reasons.

Five Reasons New Zealand is so expensive.

1. 15% Sales tax is included in prices.

15% sales tax is included in all prices, including things like fruits and vegetables that may not be subject to sales tax elsewhere. Unlike the US, prices are generally quoted including our sales tax, which is called GST (Goods and Services Tax).

New Zealand: Pretty but pricey.

2. There is no tipping.

Since there is no tipping in New Zealand, base prices are higher as they include staff wages. Minimum wage in New Zealand is $13.50 an hour.

3. Fewer economies of scale.

Since the population of New Zealand is only 4 million, there are fewer economies of scale to drive prices down compared to larger countries like the US. When New Zealand companies are buying goods to import from China, they will be negotiating small quantities for our smaller market.

4. Fuel/Petrol tax is $2.32 a gallon.

According to wikipedia, the average tax on fuel in the US is 48.9 cents per gallon. In New Zealand, the tax on fuel for vehicles is 61.129 cents per liter which equates to $2.32 NZD per gallon (about $1.90 USD).

This doesn’t just inflate the cost when you fill up your rental car with gas, it also increase the cost of everything that is transported.

5. Pricing discrimination

It drives New Zealanders crazy that many goods made by global companies are priced MUCH higher than the exact same item, sold my the same company in the US. For example, Apple computers are priced several hundred dollars higher here, even taking into account the currency conversion and sales tax.

Nike, Adidas, and other brand name sneakers are another example of an item that is typically priced much higher here and the same item sold in the US. A pair of sneakers that is $100 in the US, might be priced as high as the equivalent of $190 USD in New Zealand. Since they’re usually made in Asia, it’s hard to think the shipping cost to New Zealand would be higher than to the US.

5 Responses to Why is New Zealand So Expensive?

  1. Pingback: Top 10 Ways to Save Money in New Zealand: Travel Tips - 30Traveler | 30Traveler

  2. Interesting analysis of the cost of New Zealand travel. The higher minimum wage has a lot to do with it. After 2 months in Australia we found New Zealand to be relatively affordable because the Aussie wages are even higher. New Zealand is definitely worth it as a destination though.

    Cheers,

    Michael

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  4. I have lived and worked in NZ for 53yrs,born and bred,and I have never known this place to be as expensive as it is now.
    This country is governed by greed.
    I’m moving to the USA with my American wife. Lower or no GST on food items and higher wages.

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