Tourism leaders call for bed tax

The report proposes a National Tourism Infrastructure Levy to raise $65m a year.

The Government has welcomed a report proposing bed levies and raising airport departure charges as a "useful contribution" to the intensifying debate on how to fund tourism infrastructure.

Four of New Zealand's key tourism leaders are calling on the Government to introduce a bed tax and a $5 increase in the border levy to fund facilities and infrastructure growth.

They 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.

The report released yesterday is the result of work commissioned by the chief executives of Air New Zealand, Auckland Airport, Christchurch Airport and Tourism Holdings.

The report 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.

Air New Zealand chief executive Christopher Luxon - one of the executives who commissioned the work by consultants McKinsey - said the infrastructure levy would add about 1 per cent to the average international visitor's spend.

It would not necessarily be popular with everyone in the industry, but he said Prime Minister John Key was very interested in the report.

Auckland Airport chief executive Adrian Littlewood, Tourism Holdings head Grant Webster and Christchurch Airport boss Malcolm Johns joined Luxon in presenting the report to Key this week.

A spokesman for Key, who is also Tourism Minister, said: "Over the coming weeks and months the Government will engage further with the industry and other key stakeholders such as local government before reaching a decision on the best mix of funding tools for the future."

Luxon said it was time for some significant investment in infrastructure, beyond a $12m fund the Government had set up for small communities this year.

"We need to do that each year to fix the obvious gaps and the pain points and make sure we're future-ready as well."

The report highlights the fact that the Government benefits significantly from tourism, including an estimated $2.8 billion in GST that tourists pay every year, and should invest alongside the industry.

The proposal had been designed to avoid problems overseas, as with the Australian Passenger Movement Charge, where tourism taxes are used for general revenue.

"Any tax revenue collected should be transparently ring-fenced for local mixed use tourism infrastructure development. The proposal is for 100 per cent of the funds to be disbursed by the new agency in charge of local, mixed use tourism infrastructure," the report says.

The bed tax would also target AirBnB and campervans.

Wellington Airport chief executive Steve Sanderson said the company supported investing in regional tourism infrastructure.

"However, we do not support a border levy on all travellers including New Zealanders and it needs to undergo a rigorous and robust analysis before proceeding."

A spokeswoman for Auckland Mayor Phil Goff said he had not seen the report and could not comment.

This week, Goff proposed a visitor levy on Auckland accommodation - a few dollars a night at a backpackers to $20 or more at the city's top hotels. The levy on Kiwis and overseas visitors could raise $20m-$30m a year.

The levy is one of three ideas put up by Goff to raise extra funding. The others are a regional petrol tax, requiring Government approval, and a targeted rate for new large-scale housing developments.

- additional reporting by Bernard Orsman.