Tax the border, not the beds, says Auckland Chamber of Commerce

Imposing a visitor tax at New Zealand's border is the fairest way to ensure tourists contribute to cover their costs, says Michael Barnett of the Auckland Chamber of Commerce. Photo/File

Imposing a visitor tax at New Zealand's border rather taxing the accommodation sector is the fairest way of ensuring tourists contribute to cover their costs, the Auckland Chamber of Commerce says.

Auckland Mayor Phil Goff previously outlined a plan to implement a visitor levy on hotels and accommodation, a scheme which he said could raise up to $30 million.

But Auckland Chamber of Commerce chief executive Michael Barnett, who has previously described the proposal as "a knee-jerk, easy response that will not deliver positive benefits to the city", said a far better option was a targeted visitor tax imposed at New Zealand's border.

"The tax should go into a fund that is especially established to meet the huge cost of infrastructure New Zealand's tourist surge is generating," Barnett said.

"Local councils should be able to apply to the fund for undertaking tourist-related improvements. I suggest there could be a governing body to ensure the right projects are funded and councils also contribute."

Barnett said he would welcome any decision from central government to top up the fund.

"I suggest the amount be nominal, calculated to meet the real cost of the surge in tourism, and could be varied as needs arise."

Goff announced the proposed "bed tax" in his first budget in November.

The council cannot set such a tax, but Goff plans to achieve the same outcome through a targeted rate on all accommodation providers, "which we expect to be passed onto guests through an additional charge on their bills", he previously said.

Indicative analysis suggests the levy would equate to a 3 per cent to 4 per cent surcharge. For backpackers, typically paying $50 to $100 a night, the surcharge would be $1.50 to $4. A guest in a five-star hotel room costing $500 would pay $15 to $20.

Bed taxes are widely used overseas, including across Europe, Britain and the United States.

Four of New Zealand's key tourism leaders came out in support of the tax, but said they also wanted a $5 increase in the border levy to fund facilities and infrastructure growth.

Air New Zealand, Auckland Airport, Christchurch Airport and Tourism Holdings want a $130 million annual fund, half funded by the Government, to meet infrastructure problems exacerbated by surging tourist numbers, particularly for smaller regional centres.

A report commissioned by the chief executives of the tourism giants proposes a National Tourism Infrastructure Levy, made up of a 2 per cent national bed levy across the accommodation sector and a $5 increase to the border levy, to raise $65m a year.

This would be on top of airport departure charges (typically $25), a recently increased border levy and aviation security charge.