Tourism industry wary over bed tax

A bed tax could work well in areas such as Queenstown, where most people stay in commercial accommodation, but not so well where many visitors stay privately, or rent their own place, says the Tourism Industry Association.

The organisation representing tourist operators says that bed taxes can work, but only in some places.

The Tourism Industry Association says it acknowledges that visitor numbers are putting pressure on areas with small rating bases like Kaikoura, Queenstown and the West Coast.

"TIA is open to the possibility that visitor levies could be introduced in some regions but only if they are supported by the local community and are re-invested in tourism-related projects," said the association's chief executive Chris Roberts.

The association represents around 1500 tourism businesses and, in response to a Local Government NZ paper on funding, said its historical position was to oppose bed taxes because they were ill-defined.

It had adopted the position because bed taxes targeted only those people staying in commercial accommodation.

"It is a 'lazy tax' in that it misses the many visitors to regions who stay privately with friends and relatives or in rented holiday houses," the association said.

TIA was not opposed in principle to the possibility of individual communities introducing some form of an accommodation tax provided:

The imposition of such tax reflects the flow of the dollars coming into the "visitor economy". Something now traceable through the Ministry of Business, Innovation and Employment's regional tourism indicators and estimates.

Mechanisms are in place to quarantine such tax revenues for use within tourism.

The revenues raised are in addition to rather than in substitution for existing funding streams.

The association would back a community's decision to levy a bed tax on the condition that the revenue collected is re-invested for the purpose intended, for example in destination promotion or destination management.

"A bed tax is always going to be a more effective way of raising revenue in a big tourism area like Queenstown where the majority of visitors are staying in commercial accommodation. It does not work so well in the Thames-Coromandel area, swelled by visitor numbers in the summer, but where visitors largely stay in rented accommodation or their own holiday homes or baches."

It also warned LGNZ that there were administration and compliance costs that are involved.

"While such costs may be easier to absorb for larger commercial accommodation operators, for smaller businesses, which are predominant in our industry, an increase in compliance costs can make their operations less financially sustainable," the association said in its submission.