Queenstown Lakes District Mayor Jim Boult has campaigned for a 'bed tax' to help pay for rising infrastructure costs in the booming tourist destination.
Boult has suggested a $10 per bed per night tax for visitors as an option.
Local businesses, however, are worried a bed tax could be costly and drive people away from staying in the town.
Queenstown Lakes District Council chief executive Mike Theelen acknowledged the possible benefits of a bed tax but admitted it could have adverse effects on local businesses.
"We certainly don't want to keep adding more burden onto ratepayers to support that industry," Mr Theelen said.
"We need to look for fresh ways of doing that. A bed tax is a well known, internationally recognised tool for that."
Queenstown’s Chamber of Commerce chief executive, Ann Lockhart, said tourist numbers have grown to the point where urgent measures need to be taken.
Colliers International data shows that tourism in Queenstown is growing disproportionately ahead of the rest of the country, with a record-breaking 19.8 percent growth in revenue per available room.
