Blow to Queenstown Lakes bed tax plan

The Government has been advised allowing bed taxes by the Productivity Commission. Photo: Getty...
The Government has been advised allowing bed taxes by the Productivity Commission. Photo: Getty Images/File
An about face by the Productivity Commission appears to have seriously undermined the Queenstown Lakes District Council’s case for introducing a visitor accommodation levy, known as a "bed tax".

The commission advises Government and in July, in a draft report, signalled its support for the idea.

But, in its final report this week the commission has dropped the idea, explaining:

"In its draft report, the commission discussed a range of options ... including an accommodation levy.

"On further analysis of these options, the commission’s view is that any new funding tool would have high costs, and so be unlikely to deliver a net benefit to councils unless the shortfall was large.

"Existing revenue-raising arrangements provide appropriate ways for meeting these costs.

"Councils should make better use of their available tools, including more user charging, greater use of debt, raising, more in rates (including from efficient targeted rates), and better use of strategies and tools to plan for tourism and manage peak demand.

"In addition, significant scope exists to improve central Government funding flows to councils for tourism related amenities and services.

"[Central Government] funding should be distributed in a more systematic, ongoing, predictable and fairer way by using a transparent allocation formula.

"This would help preserve local government autonomy and avoid disadvantaging well-run councils."

A bed tax was supported by 80% of the 42% of Queenstown Lakes residents who took part in a referendum this year.

In September, Radio New Zealand reported the Government had "thrown its support" behind a bed tax for Queenstown and a bill would go to Parliament next year. [2020] 

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