Lake View to north A MR4

Q'town Visitor Tax will be wide ranging - and collected by Government

  • Mar 28,2019

QLDC has just announced more detail of the proposed visitor levy - here's their full media release.

"Since announcing the upcoming referendum on a proposed visitor levy, Queenstown Lakes District Council (QLDC) has been working closely with Central Government officials and independent tax consultants to consider what a visitor levy could look like.

Queenstown Lakes District Mayor Jim Boult confirmed that the proposed model needs to primarily apply to visitors, minimising any effect on locals who are already funding infrastructure and services through rates and user charges. 

“The QLDC team has been exploring a range of options that includes both short-term accommodation and tourism activities, as well as reviewing the capital works and operational costs to develop a clear picture of what financial demand is created by visitor activities and movements in the district,” said Mayor Boult.

“The preferred option at this stage is a targeted levy which includes all expenditure on short-term accommodation in the district, and that this will include providers using platforms such as Airbnb which is already happening in other places around the world.”

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Jim Boult "We want the model to be as fair as possible."

The models investigated include international examples of similar levies and alternative cost-recovery mechanisms. The proposed model would complement, but not replace, existing cost-recovery methods such as user charges and targeted rates where these are more efficient devices. 

“We want the final model to be as fair as possible on end-users and have minimum effect on accommodation providers with regards to administering the levy. So we are proposing a percentage-based levy rather than a fixed fee. At this stage we anticipate a potential levy in the region of 5-10%,” Mayor Boult said.

Although yet to be confirmed, it is anticipated that the levy would be collected through a partnership between Central Government and QLDC, with Central Government acting as the collection agency.

Details regarding the exact percentage and collection method will be outlined in materials that will accompany the voting papers.

Mayor Boult reiterated that although the referendum is non-binding, this is a unique opportunity and people need to participate in the vote on 5 June.

“Our district desperately needs access to additional funding for visitor-related infrastructure and services. In order for us to implement the proposed levy Central Government will need to make a legislative change. I urge each and every one of you to get involved. As a district we have a chance to be heard and send Government a clear and compelling message.”

In order to participate in the referendum, people need to ensure that they are registered on the residential electoral roll or as a non-resident ratepayer elector by 5.00pm Tuesday, 9 April. Details of how to do this can be found at www.qldc.govt.nz

If implemented, a levy is likely to be collected from 2021 at the earliest.

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  • Charlotte Mill : 28/03/2019 5:14pm (3 months ago)

    Queenstown’s Referendum

    Lakes District businesses generally acknowledge that the local council’s referendum on a bed tax is certain to deliver overwhelming support to bill visitors $40 million a year to pay for the region’s development. Asking the community to vote on this is not necessary to gauge public opinion. At worst it’s a distraction from any meaningful attempt to pull back 10% or so of the $334 million in GST that visitors pay during their stay here. Anyone thinking they will escape a new tax which others will have to pay for local improvements will vote “yes”. It’s just human nature. The referendum is a farce.

    Legislative requirements on the Council mean that it is not entitled to run up profits. Council is obliged to raise only as much capital as it has programmed for expenditure. It will be tricky indeed to balance any income from a bed tax against budgeted outgoings. Visitor numbers ebb and flow and keeping track of them accurately is a retrospective exercise. Hitching future capital expenditure to forecasts in visitor flows catapults the former into the realm of speculation. The legality of this approach could be doubtful.

    Taxpayers will hope that central government remains respectful of the fundamental principles underpinning tax policy in New Zealand. One is that tax policy is unitary and not devolved to the regions as it is in federated states. It’s naive to cite Switzerland and the US as visitor levy examples NZ should follow because these jurisdictions were established as confederations - provinces and districts were empowered to run most of their internal affairs right from the start. Changing New Zealand from a unitary state to a federation of provinces would constitute a massive devolution of power. Local institutions are not equipped for this, and central government surely has no appetite for it.

    Equity and fairness are principles that underpin NZ tax policy. So too is the concept of beneficiary pays. In the Lakes District most businesses benefit from visitors, as does much of our labour force. Less than 14% of the visitor spend goes to accommodation. The rest goes to retail, activities, restaurants and bars, transport, culture and gambling. It would be inequitable to tax just one sub sector of this economy. To be consistent with tax principles, the burden should be shared. It certainly should not be brought to bear on the only sector – accommodation – which already pays higher rates than other commercial operators simply because visitors chose to sleep on our premises rather than eat or drink in them or ride on them. Hitting the accommodation sector with a new tax would be double taxation. As an OECD member state, New Zealand has long been conscious that double taxation is a highly undesirable practice.

    Taking $40 million a year out of visitor spend in the Lakes District to build and maintain basic council infrastructure will almost certainly erode visitors’ discretionary expenditure. This would have negative flow on effects to retail, activities and restaurants and bars. It is almost certain that budget conscious visitors will spend less time here or stay away. Many of these will be in the youth market. The youth market is the mainstay of the activities and bars client base. The council’s proposal will damage these markets and alter the face of tourism in the district. Wealthy visitors are less inclined to engage in the local town economy, preferring to seclude themselves away in private jets, exclusive caterers, hidden lodges and remote charter experiences.

    Cromwell would no doubt benefit from a diversion away from Queenstown and Wanaka. As would the freedom camping sector. Growth in informal accommodation would likely ramp up beyond its current spectacular trajectory. The council is yet to grapple effectively with these burgeoning alternatives.

    Options for local body funding are currently under investigation in Wellington. The Productivity Commission is due to report in June. In its discussion document, the Commission has pointed out that the QLDC is one of the lowest indebted high growth councils in the country. Submissions to the Productivity Commission include observations that all businesses deriving income from tourism could pay a proportionate share of a new targeted rate. Empowering regions to levy transaction taxes is in the mix. So too is returning to regions that can demonstrate a high visitor to ratepayer ratio a share of the central government tax take. The Tourism Infrastructure Fund, the Provincial Growth Fund and the International Visitor Conservation and Tourism Levy all come up for mention but commentators lament that they are not being accessed by local councils.

    The Queenstown referendum will be but a tiny blip in this vastly more complicated national debate. The referendum is almost pointless and a needless distraction. Taxpayers should be looking for more intelligent outputs to come from Wellington.