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A new report has backed Queenstown's bed tax bid, but the tourism industry has hit back saying "New Zealand doesn't need new taxes" and that Kiwi travellers will be caught out by the levy.
The draft Productivity Commission report, released today, said the Queenstown Lakes District Council was one of several local authorities experiencing pressure on their infrastructure as a result of high tourism numbers.
They needed new funding tools, including accommodation levies.
"[The] Government should legislate to enable councils in tourist centres to choose to implement an accommodation levy so those councils can recover the costs of providing local mixed-use services that tourists do not otherwise pay for,'' the report said.
The independent Crown entity was asked by the Government to look at the broader question of whether local authorities' funding and financing arrangements were meeting their cost pressures.
The finding lends further support to the Queenstown council's bid for a 5% visitor levy following last month's result of its referendum of residents and ratepayers.
The referendum showed 81% support from a 42% voter turnout, which Mayor Jim Boult said was a "definitive message" from the community to the Government.
The Commission is seeking submissions on the draft report until August 29, and will present a final report to the Government on November 30.
Tourism Industry Aotearoa (TIA) chief executive Chris Roberts said in a media release it was disappointed the Commission had "defaulted to a bed tax".
It agreed local authorities needed help to support the growth of tourism, but accommodation levies would not succeed in making visitors pay their fair share.
"Last night, for every 100 of our domestic and international visitors, 30 spent the night in commercial accommodation, 7 in an Airbnb or holiday house, and almost all the rest enjoyed free accommodation, mainly with friends or relatives," Mr Roberts said.
"So the Productivity Commission's solution will fail to reach two-thirds of our visitors, even though they are using the same council facilities as those staying in commercial accommodation.
"There is nothing fair about that.''
New Zealanders would end up paying the most bed taxes, as they accounted for 60% of all commercial bed nights.
"New Zealand doesn't need new taxes. What we need is to find ways to better share the taxes and charges we already collect.''
The TIA's solution was for the Government to return the equivalent of 20% of the GST it already collected from international visitors, and distribute the funds to local government through a trust.