Editorial: Case for levy best settled nationally

Auckland Mayor Phil Gof. Photo / Doug Sherring

Opinion

No one likes paying extra taxes, even when they are dressed up as levies. Auckland Mayor Phil Goff has advanced a visitor levy, which could raise up to $30 million a year from people spending nights in the city's hotels, motels and B&Bs.

In a significant rates policy announcement, Goff has proposed restricting the average annual rate rise to 2.5 per cent and suggested a visitor levy to spread the burden more broadly across those who have benefited from the rapid expansion of tourism which Auckland has experienced for several years.

His solution, though lacking in precise detail, suggests a surcharge on an accommodation bill that could amount to up to $20 a night at one of the top city hotels.

It is not a novel idea. Anyone who has checked the breakdown of their overseas hotel bill would probably find an entry for a local tax or levy.

Funds raised would replace the amount the Auckland Council's events arm Ateed derives from ratepayers to attract visitors to the city. Goff argues that the accommodation sector benefits most directly from the rates money spent on attracting visitors and supporting big events.

It is a reasonable contention, especially in light of the numbers: commercial guest nights in Auckland have surged over 15 per cent in five years, rising from six million in the year to July 2011 to 7.3m in the 12 months to the end of last July.

Goff's case yesterday won support among councillors, but the tourism industry understandably remains opposed to the prospect of being stung by a targeted rate.

The objection is fair: hotels and motels would have to pay it - or pass it on to customers - but not, so far as it appears, people who offer rooms through Airbnb.

Visitors who stay with friends and family but who attend events promoted by Ateed would be spared the charge but still enjoy the spoils. People who rent private holiday homes would also seem beyond the reach of the levy.

The industry has produced figures to back its case that the wider Auckland economy - and not just the accommodation sector - is doing well from tourism. It estimates that the annual tourism spend in Auckland is $7.37 billion, with $771m spent on accommodation. It would seem on this evidence that the tourism dollar is being spread around.

This illustrates that new levies are not easy to design so that they target exactly what they are intended to achieve.

One exception in New Zealand is in the far south: Stewart Island charges visitors $5 and uses the money to maintain facilities for tourists. But its market is easy to capture, given that everyone takes a plane or a boat across Foveaux Strait.

The Auckland visitor does not always stay at hotels and motels, and does not always get a plane or boat to reach the city.

Goff has floated his levy plan at a time other tourist hot spots are grappling with the burden that fast-growing visitor numbers are placing on their attractions. The bill exceeds tens of millions of dollars. It is a national issue, and seems best resolved through a national approach, rather than being picked off region by region.