Visitor levy: those that benefit, must contribute

by Julie White, chief operating officer, Hospitality New Zealand

If you want a better answer, you have to ask a better question. That is the lesson British businesses, politicians and residents have all learnt the hard way since the public were given the chance to vote in a half-baked and badly researched referendum. In the case of Brexit, the question came with very little detail on how the proposal people were voting for or against would actually pan out and be implemented in practice. People did not really understand what they were voting for. As such, a public referendum, whether binding or otherwise, is sometimes not the right question to be asking.

Concern over the quality and clarity of the question asked is just one of many reasons why Hospitality New Zealand is somewhat apprehensive of Queenstown Lakes District Council’s (QLDC) announcement that it would be offering residents a non-binding referendum on whether they want a visitor levy implemented in the region. The issue of underfunding for infrastructure, versus a sustainable tourism economy, are not isolated to QLDC. While this particular referendum speaks to the Queenstown area, both visitor levies and the power of councils to implement them on an ad hoc basis across the country, should be considered as a pressing matter of national concern.

In the example of QLDC, curiously, the council’s announcement of the referendum did not indicate how the levy was to be implemented. At least at the time of writing, transparency on who would be paying the levy, who would be responsible for collecting it, how much the levy would cost, how much the levy would raise, and what exactly beyond “infrastructure” it would be put towards, appeared to have been left up to the voting public’s imagination.

One detail that has become clear is that the referendum is expected to cost in the area of $70,000, which sounds like it could be better put towards, well, infrastructure. QLDC Mayor Jim Boult has said he hopes a levy would raise between $25-40 million. That 40 percent margin of difference suggests that the council have not done their homework, either on how much they need to raise to improve infrastructure, nor on where and how they can raise that figure.

Since the current coalition Government has tied itself up in an election promise to not introduce new taxes, we now see local council’s scrabbling to come up with solutions to a nationwide issue of underfunding for infrastructure that needs a consistent, nationwide, centralised resolution. We are concerned that QLDC could be setting a precedent of local council’s implementing a so called “levy” at will across the country.

With so little clarity on how this “visitor levy” will pan out, Hospitality New Zealand is concerned on behalf of our accommodation members, as well as the commercial accommodation industry as a whole. We cannot support the council on a levy that is unfairly expected to be collected and administered by one sector alone. In the case of Queenstown, the growth in the residential population (including absentee property owners) is putting as much pressure on resources and infrastructure, as short-term visitors. Everyone benefits from tourism. It brings events, activities, facilities and (more importantly) jobs to the area. Everyone benefits from improved infrastructure. Visitors utilise the benefit of better infrastructure for a day or two. Local residents reap the benefit all year round. Anyone who stands to benefit, must be expected to contribute.

We cannot support this proposal if it places all the cost, risk and onerous responsibility of administering and collecting the levy on to the commercial accommodation sector. If not applied to peer to peer accommodation, it would also widen the already unequal playing field between these two styles of accommodation business. In QLDC, the commercial accommodation sector only receives a 14 percent slice of tourism spend. As a national average, the figure is even lower at just 11 percent. A bed tax would ignore all those businesses (from activities and tours through to the local dairy) that benefit from the other 86 percent of tourism dollars. It also completely ignores that 40 percent of visitors to QLDC are domestic tourists, 30-50 percent of visitors to the area do not even stay overnight, and 25 percent of “visitors” to the area are not there on holiday, but for business, family events such as a wedding, or to visit or care for a relative.

The commercial accommodation sector would of course meet its social obligation of giving back to the community in which it operates. It is what the honest, hard-working and tax-paying accommodation operators that make up our membership already do, and is just one reason why the gap between them and the likes of Airbnb is so wide. What commercial accommodation operators cannot feasibly support is taking on all the cost and work involved, while the other 86 percent reap the rewards and benefit.

Julie White is the chief operating officer of Hospitality New Zealand.