Brian Rudman: Tax on hospitality cowboys might trim our $507m bill

Before we use up all our tears over Aussie and Pommy rugby fans being bled dry by "hospitality" industry vultures, save a sob or two for ourselves.

At least the overseas visitors can choose whether or not to leap aboard the money-go-round that is the Rugby World Cup 2011. We payers of tax and rates cannot, and we're already facing a bill of $507.6 million.

And that's the rosy forecast. This week Auckland City officials were agonising over the Eden Park Trust Board's request that Auckland ratepayers underwrite a $40 million shortfall in money raised for the stadium redevelopment. The commitment is needed because trust chairman John Waller says "the banks won't lend the money because the park can't service it".

The trust is trying to reassure nervous city councillors that once sponsorship and membership programmes start, they'll be able to bridge the shortfall and the ratepayers' cash won't be needed.

Here's hoping they're right. But in 2006, the trust promised to raise $65 million for an earlier incarnation of the project, and so far not a penny of that has surfaced.

But even if Auckland ratepayers don't have to cough up this $40 million, the Herald on Sunday last weekend calculated that total public spending for the World Cup will be $507.6 million - or $118 for each New Zealander.

Admittedly, $359 million of this is going on stadium developments, mainly in Auckland and Dunedin, which will live on as a permanent legacy. Whether that legacy turns out to be positive or negative is for future generations to judge. What is certain is that they will be inheriting not only any debt, but the running costs of these facilities.

While the politicians and economic spin-doctors gaze into their crystal balls and come up with wildly varying assessments of the economic impact of this event, and who will benefit, down at street level two sectors are making sure as much as possible of the gold dust rubs off on themselves.

First and foremost, of course, is the International Rugby Board. The IRB is being coy, but it is said to have collected more than $275 million selling broadcasting rights for the 2007 cup, and then some from stadium advertising and sale of merchandise.

To help the IRB protect its monopoly, our politicians, in 2007, kindly passed the Major Events Management Act which banned ticket scalpers and set up advertising "clean zones" around stadiums and on main traffic routes to them. Even streaking has been criminalised for fear someone might breach the IRB monopoly by running on to the field with a non-sponsor's logo painted on their buttocks.

The other group trying to cash in are the travel and hospitality traders.

This week we read of a Mt Eden bed-and-breakfast villa quoting $1600 for a one-night stay during the event and of tourists paying $17,000 for a week in a prison cell-sized hotel room. In the deregulated, market-driven world we live in, this comes as no surprise.

In previous times, the politicians would by now have been muttering about introducing price controls to rein in the greedy. However, that would involve a costly team of bureaucrats and isn't going to happen anyway in these laissez-faire times.

But if our parliamentarians can pass legislation to aid and protect the IRB's fund-raising activities, then why not a leech tax on the exorbitant profits the cowboy section of the hospitality industry is planning to pocket.

I've always supported the concept of a modest tourist bed tax which would help fund tourist-related facilities that ratepayers currently shoulder - or which don't get built. A new cruise ship terminal, for example, or the upkeep of Mt Eden and One Tree Hill.

My World Cup anti-exploitation tax would be rather different, as much deterrent as fund-raising. Anyone offering beds for World Cup visitors would have to register proof of their existing tariffs with the tax authorities.

They would then have to notify what they charge cup visitors. A suitably harsh and progressive tax would be levied on those obviously ripping off our guests.

Not only would it wing the vultures, it might also ensure taxpayers got a modest return from our $507 million investment.