Auckland Mayor Phil Goff has proposed a visitor levy on hotels and other accommodation - costing a few dollars a night at a backpackers to $20 or more at the city's top hotels.
The levy would apply to all New Zealand and overseas visitors and could raise between $20 million and $30m to replace ratepayer-funded spending to attract visitors and support major events.
The visitor levy is one of three new ideas put up by Goff to raise extra funding in his first budget. The other ideas are a regional petrol tax requiring Government approval and a targeted rate for new large-scale developments.
It is wrong of the mayor to suggest that visitors are not already paying their way
The former Labour MP has also proposed introducing a living wage for about 2100 staff over three years at a cost of about $9m, an extra $500,000 to support homeless people and reducing this year's budgeted rates increase of 3.5 per cent to 2.5 per cent. Goff has promised to cap rates increases at 2.5 per cent in his first term.
"This proposal puts the people of this city first by taking a responsible and fair approach to tackling Auckland's growth challenges, and seeking to support those who most need help to live a decent life in our city," Goff said.
Goff said ratepayers have shouldered the responsibility for growth in Auckland and he planned to share that responsibility more fairly across those who benefit from living and doing business in the city.
The council cannot set a bed tax, but Goff plans to achieve the same outcome through a targeted rate on all accommodation providers, "which we expect to be passed onto guests through an additional charge on their bills".
Indicative analysis suggests the levy would equate to a 3 per cent to 4 per cent surcharge. For backpackers, typically paying $50 to $100 a night, the surcharge would be $1.50 to $4. A guest in a five-star hotel room costing $500 would pay $15 to $20.
Bed taxes are widely used overseas, including across Europe, Britain and the United States.
Goff said staff would work with the tourism and accommodation sector to design the levy. If it is implemented the two sectors will be invited to participate in a body that will advise Auckland Tourism, Events and Economic Development (Ateed) on how the money is spent.
Tourism Industry Aotearoa chief executive Chris Roberts said the council should be supporting tourism growth in Auckland, not trying to fleece the golden goose.
He said the proposed levy unfairly targets accommodation providers and fails to take account of the economic benefits tourism brings when the benefits were spread throughout Auckland's economy.
"It is wrong of the mayor to suggest that visitors are not already paying their way.
"Auckland is benefiting more than any other part of New Zealand from the tourism boom - and the benefits flow throughout Auckland's economy," Roberts said.
He said of the total tourism spend of $7.37 billion in Auckland last year, just 10.5 per cent or $771m was spent on accommodation.
"That shows how widely distributed the tourism dollar is, benefiting the wider Auckland economy and its residents," said Roberts.
Hotel industry expert Stephen Hamilton said Goff was talking about funding to attract visitors and support major events, but the issue in the rapidly growing tourism industry was not to do with marketing but funding facilities like toilets and convention centres.
"This doesn't look like a very targeted levy to fund specific new investments and initiatives," Hamilton said.
Prime Minister John Key, who is Minister of Tourism, told his post-cabinet press conference that a working group report on the issue of tourism-related infrastructure and how it could be paid for is imminent.
Asked about Goff's proposed levy, Key said if it was to happen it should occur nationally, not locally.
"Auckland may have some tourism issues...but the reality is so does Queenstown, so does Taupo and so does the West Coast of the South Island," Key said.
Goff's first budget proposals will be presented to Wednesday's finance and performance committee. The council's governing body will make decisions on the draft budget for consultation before Christmas. After consultation the budget will be finalised and come into effect on July 1 next year.