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A Queenstown Lakes District Council rates proposal dubbed the "bed tax" by the Motel Association has come under fire.
The proposed tax, officially called the recreation and events rate, would help council recover costs associated with the 2.8 million visitors who visited Queenstown each year by taxing tourism and accommodation outlets.
Visitors would be levied 50c per day, which, applied to the number of visitors to the resort, could reach $1.4 million a year.
Businesses would be at the forefront of the charges which the Motel Association said would "stifle business growth and harm the economic recovery".
Chief executive Michael Baines said the tax would effectively take money away from small business owners and for some businesses it would be too much to stay afloat.
"It's bizarre. The whole Queenstown area is built on tourism. To turn around and tax them seems counter-productive."
He warned the council could end up "taxing each other" because there would be no-one left to tax when businesses were forced to close.
He was critical of the council for "not acting efficiently" which he said had resulted in the tax.
"It's hard to believe they are an efficient organisation, it's hardly credible to ask for more money from the commercial sector.
"Local authorities can just impose a tax on people and it takes the pressure off them to act efficiently."
Council deputy chief executive and finance general manager Stewart Burns said the proposal was a general rate, rather than a "bed tax".
When contacted he was adamant it was very different from a bed tax, despite a statement on the council site which said the proposal was "the next best thing" to one.
"Every person in the district will be subject to this rate.
"People need to understand what it is we are doing before making any comment. It's all in the public area and we will be taking submissions in the next month."
"The Motel Association is welcome to make a submission and I'm sure they will."
Auckland Council had also proposed a bed tax which the Motel Association criticised.
Queenstown mayor Vanessa van Uden could not be reached for comment.