23rd November 2016

Auckland’s new mayor Phil Goff has suggested a $5 bed tax on each night a traveller stays at a hotel in Auckland. The aim is to keep rate rises to last year’s 2.5% and the levy could raise $30 million in revenue to be applied to tourism advertising and building attractions for tourists. The city council will decide next year.

Mr Goff, just two months after being elected, stated that ratepayer funding, the city’s old system of attracting travellers and providing financial support for major events, was not sustainable as the ratepayers had bore the burden of the city’s growth for too long. 

Hotels, guesthouses, hostels, and other accommodation providers can expect their rates to rise, but can easily recover costs through the levy, the mayor said. He added that providers will see the benefits of the tax without paying the levy.

The onus of the levy will fall squarely on the visitor. According to the mayor, a traveller spending a night at a four or five-star hotel in Auckland paying between $280 and $380 will have to pay an additional $6 to $10.

The proposal shares the responsibility the ratepayers once had to worry about themselves by spreading it more fairly across all of those who benefit from living and doing business in Auckland, the mayor said. If passed the proposal would allow Goff’s Auckland Council living wage for more than 3,000 city and council employees promise to pick up steam. The higher wages would cost $9 million annually and would be phased in over a number of years. An additional contribution of $500,000 could also be made to support programs for Auckland’s homeless. These two measures are set to be considered, along with the bed tax, in the council next year. 

However, the bed tax would present the biggest change in Mr Goff’s first budget as mayor. He had hoped the government would sign off on a regional fuel tax, but it looks unlikely to happen.

Prime Minister John Key said all of New Zealand should consider the levy as much of the country suffers from similar problems Auckland does. According to Mr Key, he expected a report from a working group that was doing research on the cost of tourism infrastructure.

The prime minister said that if Auckland was going to do something in terms of ‘that sort of mechanism,’ then it should be done nationally and not only locally. Auckland may have some tourism issues, given so many people flow into Auckland, but the reality is so does Queenstown, so does Taupo, so does the rest of the North Island, the prime minister said.