Industry News

Visitors already taxed but benefits not shared

Another tax on visitors like the proposed bed tax is not the right answer to Queenstown’s growth pains, says TIA.

“TIA accepts that Queenstown Lakes District Council needs additional funds to address its infrastructure challenges and that it is not fair for ratepayers alone to bear this burden. But it is also not fair to single out the accommodation sector to fix the local funding shortfall,” TIA Chief Executive Chris Roberts says.

The council revealed today that its preferred option to meet a shortfall in funding for infrastructure projects is a 5-10% bed tax on short-term accommodation, including peer to peer accommodation options like Airbnb. The tax would apply across the Lakes District, including Wanaka. The tax would require Government support and legislation before it could be implemented. The Council will seek residents’ opinion in a referendum on 5 June.

Mr Roberts says an additional 5-10% on accommodation costs risks harming the district’s wider business community.

“Many visitors have set budgets so if they are forced to spend more on accommodation, they may well spend less on other things, like activities or eating out. They may also choose to spend less time in the Queenstown Lakes District. Conference organisers may decide that it is no longer competitive to hold valuable corporate events in Queenstown.”

He notes that New Zealand visitors to the Queenstown Lakes District would also be forced to pay the bed tax. Kiwis account for 30% of the commercial bed nights in the Queenstown Lakes District.

However, day trippers, freedom campers, people staying with friends or family, or borrowing a mate’s holiday home, would not pay the proposed tax.

Mr Roberts says TIA fully accepts that Queenstown has infrastructure challenges as a result of the growth it has experienced in both residents and visitors.

“Investment in the resort’s infrastructure has long failed to keep pace with that growth and it’s now time to play catch-up. Queenstown’s biggest challenge is transport and there is a strong case for central government and its agencies like NZ Transport Agency to make a major contribution to this urgently needed investment.

“New Zealand is a substantial beneficiary of tourism, and Queenstown is a vital cog in our tourism offering. Central government receives substantial financial returns via direct taxes from visitors through GST and indirect taxes from participants in the industry. Communities with high tourism intensity like Queenstown have infrastructure demands they cannot address alone.

“New Zealand already collects a substantial levy from international tourists of around $1.7 billion a year via GST. This is seen by TIA as the most effective, efficient and fairest form of a tourism levy, and in our view some of this GST should be assigned on an ongoing basis for redistribution to local government.”