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Govt Rejects Committee's 'Room Tax' Recommendation

The government announced today it would reject a recommendation from a parliamentary select committee to insert a so-called 'room tax' clause into the new Local Government (Rating) Bill.

Local Government Minister Sandra Lee and Tourism Minister Mark Burton said Cabinet had not been convinced by the select committee's view that councils should be given the power to levy a rate on hotels and motels, based on room numbers regardless of occupancy.

"This 'room tax' clause was not in the original Bill that the government introduced," Sandra Lee said, "and we will seek to remove it through remedial provisions in a Supplementary Order Paper.

"The Bill does give local authorities greater rating flexibility, but the added clause targeting the accommodation sector is the only industry-specific one – and that is simply not equitable," Sandra Lee said.

Mark Burton said the Labour Alliance coalition was committed to regional and economic development and tourism had a crucial role to play.

"I am pleased that my Cabinet colleagues have agreed that this clause, however well-intentioned, poses too great a threat to our tourism industry to be allowed to remain in the bill," Mark Burton said. "I know the industry sees a 'room tax' as being a serious barrier to future tourism development, and the government has taken that concern into account in reaching this decision."

Although the select committee's report was tabled before Christmas and therefore became a public document then, the government will have to wait until Parliament formally receives the report back from the committee on the Local Government (Rating) Bill before it can take remedial action.

"Even though National, ACT and Green MPs were part of a unanimous decision by the Local Government and Environment select committee to insert the 'room tax' clause, we hope those parties will support our move to scrap it," the Ministers said.


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