Will the idea of a bed tax for the Queenstown Lakes district survive the machinations of Central Government?
That question was left hanging this week after an announcement from the Productivity Commission which advises the Government.
In its July draft of its local government funding and financing report, the commission supported the Queenstown Lakes District Council’s call for a 5% visitor accommodation levy, to help fund infrastructure.
But in its final report this week it dropped the idea, saying the costs were likely to outweigh the benefits.
Queenstown Mayor Jim Boult said yesterday the commission had simply "lost their way and lost the confidence to make the right decision" and he was "confident" the commission’s views would not affect the Government’s thinking.
The council and Government officials are preparing a Local Bill for the bed tax, and yesterday a Government official said the commission’s report "won’t have any impact on the work officials are doing with council".
Clutha-Southland MP Hamish Walker will introduce the Bill to Parliament in the first half of next year.
He did not respond to messages yesterday.
The commission said any new funding tool, such as a bed tax, would have high costs, and was "unlikely" to deliver a net benefit to councils.
Anti-bed tax campaigner and Lakes District Tax Equity Group member Nik Kiddle said he was "very pleased" to see the report.
Ministers were not obliged to adopt the commission’s recommendations, he said, but they would take account of them.
"I think it is a very useful, informative report that will help shape decision-making in Wellington."
Like the commission, Mr Kiddle considered there were better ways for councils to fund infrastructure — such as borrowing more and introducing user charges for such things as the walking tracks up Wanaka’s Mt Iron and to Roys Peak.
Mr Kiddle also backed the commission’s suggestion of using targeted rates.
"There is a case to spread the burden of rating increases across other activity operators and tourism businesses.’’
Another member of the group, Wanaka motelier Peter Sutherland said the commission’s report was done by experts in local government funding but the Government could still "ignore" it.
"But, I don’t think [the council’s] going to have much success, particularly given that the Government’s got a $7 billion surplus at the minute.
"I guess introducing a new tax is probably not a good look."
The commission considered there was "significant scope" to improve central Government funding 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."
A bed tax was supported by 80% of the 41% of Queenstown Lakes residents who took part in a referendum this year.
