The country's top judges will decide once and for all if Auckland Mayor Phil Goff's controversial bed tax is legal.
Auckland Council has decided to appeal a Court of Appeal decision that ruled the tax invalid.
After reviewing the decision, the council said it considers there are good grounds to appeal and in the public interest to seek leave to appeal to the Supreme Court - the highest court in New Zealand.
Aucklanders have forked out more than $1.5 million in legal costs to defend the bed tax, which has collected more than $40m from hotels and other accommodation providers since 2017.
Before it was introduced, it was estimated to add up to $10 on a hotel bill.
The tax, officially known as the accommodation providers targeted rate (APTR), was the brainchild of Goff as an alternative to rates to fund tourism promotion and major event work by the council's events arm, Auckland Unlimited.
He introduced it the year after he came to office in 2017 against strong opposition from the accommodation sector.
The latest and last legal avenue is a high stakes game for Goff, ratepayers and the accommodation sector.
Lose and Goff will have egg all over his face. The council will have spent more than $1.5m of ratepayers' money on lawyers and have to pay back more than $40m to the accommodation sector when the council can least afford it at a time of Covid-19 hardship.
Win and Goff will be exonerated and the tax will stay in place to attract visitors to the city and hold major events.
"As the question of an appeal is now before the Supreme Court, it would not be appropriate for us to make any further comment at this time," the council said.
In a decision released last month, the Court of Appeal found the council had "reverse engineered" justification for the bed tax.
The court said the council did not have the power to target visitors directly through a bed tax or visitor levy, saying there was "virtually no assessment" from the council on the benefits to the targeted group.
"The council's failure to adequately consider this mandatory relevant consideration was an error of law going to the heart of the decision," the judgment said.
Hotel Council Aotearoa said it is disappointed to learn that Auckland Council is throwing more public money at unnecessary litigation.
This latest decision is a missed opportunity for Auckland Council to show real support for the city's struggling tourism and hospitality sector, said strategic director James Doolan.
"The APTR is poorly designed and almost comically unfair. It is a quasi-tax that massively increases rates for a small minority of tourism industry businesses. Covid-19 has proven beyond all doubt that the APTR does not work as intended, yet Auckland Council refuses to adjust to new circumstances and simply end this good times tax once and for all," he said.
Doolan said Hotel Council Aotearoa has made repeated offers to Auckland Council to work collaboratively on agreeing principles for a fair, reasonable and nationally endorsed funding model for the tourism economy that draws upon international best-practice and robust research.
"Even though we are deeply disappointed by this latest legal manoeuvring, we once again repeat our offer to work with council on solutions that are fair and reasonable."