The Auckland Council’s proposed tax is a tax on visitors, right? Wrong. It won’t touch the visitors’ back pocket. It’s a targeted rate based on the capital value of a building. Rachael Shadbolt says this is why it’s time we all had the ‘facts of life talk’ about targeted rates, council funding and how to birth this NZ tourism baby.
As you read this column, the Auckland commercial accommodation sector is playing the waiting game while Auckland Councillors consider ours, and many other submissions about a targeted rate proposal that is unaffordable and unfair to the sector.
Some submissions have been emotional, and who wouldn’t be if you could see the future viability of your business or investment disappearing courtesy of a Councils grab for money.
Throughout the public consultation, the targeted rate was referred to as a bed tax or visitor tax. The consistent inaccurate use of these terms had to be more than a slip of the tongue, but more a convenient use of words that the general Auckland ratepayer kind-of understood.
It’s a tax on visitors, right? That’s ok then, no harm done, user pays etc. Except…this is not a bed tax or a visitor tax. It’s a targeted rate based on the capital value of a building. It doesn’t go near the visitors’ back pocket, but it definitely dives deep into the pockets of commercial accommodation providers, developers and investors.
Which is why we need to have ‘the talk’. The facts of life are that our tourism baby is definitely growing up and, like any adolescent, it’s going to cost a lot of money over the next few years. ‘The talk’ is about a visitor tax or levy, to help fund tourism or tourism infrastructure. It’s going to be awkward, people are going to have varying views, it’s not an easy conversation to have and ultimately someone needs to pay.
Councils have few revenue generating channels available to them. So, ‘the talk’ should probably include a review of the Local Government Act. Maybe councils do need a few more well considered, fair and equitable levers they can pull to generate funding for tourism.
At a national level, there is definitely the need, if not the appetite, for a visitor tax or levy discussion. It’s already been mooted by a number of big players in the industry, so let’s have that talk too. And as any parent would know, don’t put it off, have the conversation sooner rather than later, otherwise we might see many more unplanned targeted rates popping up unexpectedly.