Accom stepped up its resistance to a Queenstown bed tax this week, saying the levy is far from a ‘done deal’ despite the government agreeing to prepare a draft Bill for its introduction.
Hospitality NZ chief operating officer Julie White went into bat against the plan, describing bed taxes as a “blunt mechanism developed in an era (1946) when scant data was available on tourist spend”.
She told AccomNews the levy was an “outdated model of funding for local authorities” which fails to take into account current data to accurately and equitably distribute funds.
The draft Bill will outline requirements for accom providers to collect a five percent tax from visitors for each night spent in their property, a plan formulated by Queenstown mayor Jim Boult as the district struggles to fund the infrastructure costs to cater for three million visitors each year.
Despite community support, the proposal remains controversial among accom operators who feel unfairly targeted as just one among a raft of other sectors benefiting from tourism spending.
White argues the levy will have a detrimental impact on hoteliers as they struggle to pass on the cost and end up having to subsidise the tax.
“The accommodation industry pricing is highly elastic,” she said.
“The price sensitivity of the traveller directly affecting demand will have to be absorbed by owners and will create a race to the bottom on pricing for the commercial accommodation sector.”
Tourism industry Aotearoa, meanwhile, has come out swinging against Productivity Commission support for the plan, saying the independent advisory body needs to “rethink its approach”.
In a response to the commission’s report on local government funding, TIA chief executive Chris Roberts said: “We are disappointed that the Productivity Commission’s draft report has taken the path of least resistance in recommending bed taxes, rather than a thoughtful and detailed analysis of the issues and complexities of local government funding.
“The solution suggested by the commission fails to meet its principles of efficiency, equity and fairness, and sustainability.”
Roberts points to analysis by Horwath HTL showing that of some 140 million international and domestic visitor nights a year in NZ, only 35 percent are spent in commercial accommodation while the rest involve student houses, stays with loved ones, free camping and other non-paid options.
“So a bed tax would miss the majority of travellers and add costs to a small set of operators who are already struggling with increases to wages and compliance costs, at a time when tourism is slowing,” he said.
TIA has long proposed that government instead puts 20 percent of the GST collected from international visitors and distributes these funds to local government to address local tourism needs. The allocation would be determined by the measured level of visitor impact on each local authority.
“New Zealand doesn’t need new taxes. What we need is to find ways to better share the taxes and charges we already collect,” said Roberts.
Airbnb disagrees, regional policy director Brent Thomas welcoming the drafting of a bill as “an important step to making the proposed visitor levy a reality”.
“With more than 34 international visitors for every one Queenstown resident, it is clear that the existing sources of revenue are inadequate and place a disproportionate burden on local families and businesses,” he said.
“We support Mayor Boult’s infrastructure vision for this beautiful region, and his plan to introduce a new visitor levy in Queenstown to support that infrastructure.
“Airbnb has long advocated for visitor levies and believe they are a fair, proven and sustainable way to raise revenue for local communities.”
National urban development minister Phil Twyford says while officials have been assigned to work with council to draft the Bill, no final decision on its introduction has been made.
Lani Hagaman, chair of the newly-formed New Zealand Hotel Owners Association representing around half of the country’s major hotel owners, argues that while the government is bound to look at the proposal, the Bill is a long way from being passed into law.
In a statement, she suggested alternatives should be explored, including seeking funding and partnerships with the private sector, and argued more taxes were not the solution.
“If you keep on repeatedly clipping the ticket, soon enough there will be no ticket left,” she said of the plan to charge accom providers.