Watered down bed tax for $10 million

30 May 2017

Media Release

Watered down bed tax for $10 million – “… or chase a bigger prize?”

Auckland businesses are already paying 2.73 times more rates to Auckland Council than residential rate payers.

“It is from this pool of money that Council should promote Auckland, if it is going to persist in using rate payer money rather than looking seriously at user pay options,” said Auckland Chamber of Commerce CEO Michael Barnett.

Unchallenged evidence through the months of debate on this topic is that Auckland’s accommodation sector across the board receives less than 10% of tourism revenue benefits yet are being required to pay 100% of the cost.

Legally targeted rates should show a clear connection between those who pay the rate and those who receive the benefits from the services to be funded.

By watering down the rate – really a tax by another name – to leave only large hotels to pay the rate makes it even more unfair, discriminatory, flawed and likely open to legal challenge.

Making things worse, because the rate is based on capital value – not visitor throughput which varies significantly between high and low seasons, most hotels advise that their rate bill would be increased by up to a million dollars, and in some cases much more.

Those hotels will also be paying a business rate differential and a Heart of the City rates.

The business community has made numerous suggestions designed to assist Council to untangle itself from the mess it has created. These include to zero-base budgets to its own organization and from ATEED, who deliver tourism and promotion services, a suggestion to convene a sector-wide initiative and design a service that the tourism sector agree is required and supports.

“Is this battle worth having to raise $10 million? Probably not – there are bigger rewards from a better spend review.”

Urging councillors to reject the bed tax at its meeting later this week, Mr Barnett suggested they instead put a resolution supporting a visitor promotion funding review where all beneficiaries of tourism play their part.

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