He was also asked later about freedom campers by a woman who said ratepayers should not be responsible for tourists who chose to travel in vans without toilet facilities.
In response, he said her view was irrefutable.
"You're quite right. The very idea you can go around the country and crap everywhere is repugnant to the countryside and its ruining relationships as well. And if you do that then you're on the next plane."
He said visitors were spending up large in tourist regions and overseas corporates were making a killing taking water for bottling to export, but those regions were not seeing it come back to them.
Peters' policy would see royalties from water returned to the regions it came from as well as GST from tourist spending.
Peters was introduced by Taupo's Mayor David Trewavas who got in an early bid for infrastructure funding - "I'm sure you're going to be successful, so I'll put in a bid now."
Peters also launched a new attack on the Green Party after Metiria Turei's comment that NZ First had racist policies and Peters had made racist remarks about Muslims and terrorists.
He said it was not racist to question high immigration levels or policies that created a separate system for Maori and others.
He said the Greens promoted separatist policies, such as Maori ownership of water.
"Every time they cough, they just push their mindless philosophy which says snails are more important than people."
He also took aim at National, accusing it of ''separatism by stealth" by putting up Resource Management Act amendments which require councils to consult with iwi over what role they have, and reaching Treaty settlements which gave iwi a stake in local resources and management.
One of those was the recent Tuwharetoa settlement in the Taupo region.
He said the Government's version of the Seabed and Foreshore Act - the Takutai Moana Act - was also trouble in the waiting, saying hundreds of claims had been made to rights over the coastline.
