Kerre Woodham: Is ACT's bed tax alternative a good option?

There's a reason that people live in cities and towns that others love to visit. Beautiful beachside resorts down south, the gorgeous, gorgeous little villages nestled under incredible mountains and natural beauty, or vibrant hotspots where there's a million things to do and a melting pot of cultures and all the places of great historical relevance as well as great beauty. Of course people are going to flock to visit them. But it does cost to provide the amenities that serve the visitors and for small cities and towns, it's a heavy, heavy burden for the ratepayer.  

For a long time now, there's been discussion about whether to impose a bed tax on tourists, approximately 2.5% to 3% on short stay lodgings, and that would fund major cultural and sporting events and build the infrastructure in places where the ratepayer simply can't afford to put in the changing rooms, the loos, the motorhome parks, that sort of thing that are required. It would relieve the financial pressure on the ratepayers. Local authorities like Auckland Council face multimillion dollar budget gaps for attracting and subsidising major events that drive regional economic activity.  

Now, ACT has proposed a dollar a night from each guest night stay be given to the local council who is hosting that visitor, funded through levies and GST that tourists already pay. So not a new tax, but taking the money and taking a dollar out and giving it to the council. David Seymour estimates this dividend would give councils more than $40 million annually, but the strategic director of Hotel Council Aotearoa, James Doolan, told Mike Hosking that while it's a good start, it's nowhere near enough. 

“How do we share the massive amount of tourism tax with the people who actually host the tourists? You've got to do it everywhere nationally with a formula that doesn't change and isn't at risk of being changed by politicians from time to time. And $40 million for the entire country, I mean, Wayne Brown and Hotel Council, we agree that the number for Auckland alone should be about $40 million.  

“So there's some, again, good stuff from ACT, they've acknowledged the problem, but already we have $5 billion of GST, we have $230 million collected at the border, $230 million at IVL, and we need ACT to tell us whether that money is also going to deal with visitor pressure, which is what it was originally designed to do.” 

And it was. Remember when the international visitor levy was $35? Half went to conservation and DOC, the other half went into directly into infrastructure. Then the Coalition Government came in and changed it to $100, and now it's being used to pay for all sorts of things loosely associated with tourism. James Doolan didn't believe it should be spent on upgrading the cycle trails, given that it's mostly Kiwis that use them, but I don't know. I mean, regional tourism is still tourism, isn't it? At least it's not going on something like defence. It's not being taken out of one budget portfolio and going into another portfolio entirely.  

But if you live in a tourist town, a place that tourists flock to because it's beautiful, because it gives them an experience that they otherwise would not have, like Rotorua. Loved my time in Rotorua over Christmas, loved going back and seeing the city recovering and damn near fully recovered. Beautiful things to do there. But what do you need to spend the money on? I look at places like Whangamatā or Wānaka, and they're little, and for most of the time they chug along really nicely as a beautiful little community in a beautiful part of the world, and then woof, in comes the tourism, in comes the visitor influx. And it's not year-round, it's seasonal. How on earth do you deal with that with the huge fluctuations? If it was relatively steady, it would be so much easier to deal with.  

But when you're living in places, Ōhakune is another example, how do you deal with a massive influx of tourists all at once? Because what you need to sustain the tourists during that time is not what you're going to need for the rest of the year. And what sort of money do you need to look after the tourists properly, so it doesn't fall on the ratepayers’ shoulders? What sort of money are you talking about in the regions? What would you spend it on? Say all of a sudden, the international visitor levy gives you a windfall for your particular town, your particular region, what would you spend the money on to either attract tourists or to look after the ones who are already dedicated to coming and visiting your town?