National’s decision to rule out an accommodation levy has removed one option for funding tourism infrastructure, destination marketing and major events, but it has not resolved who will meet those costs.
Party leader Christopher Luxon announced that National would introduce no new taxes if re-elected in November, ruling out both an accommodation levy and a bank tax. The decision reversed National’s earlier willingness to investigate a charge on short-term accommodation.
Luxon said National had concluded that an accommodation levy could not be introduced without affecting New Zealanders taking domestic holidays.
“What we’ve determined is there was no other way that it wouldn’t flow on and actually hit a Kiwi family or a couple going out for a weekend away in Queenstown or in Auckland,” said Luxon.
The announcement has created uncertainty around commitments already made through regional discussions. The Auckland Regional Deal, signed by the Crown and Auckland Council in April, included a commitment to explore an accommodation levy policy in 2027.
A similar funding mechanism had also been under discussion as part of the proposed regional deal involving Queenstown Lakes and Central Otago.
Auckland Mayor Wayne Brown said the decision raised serious questions about the Government’s commitment to its agreement with Auckland. He maintained that a bed-night levy was a user charge rather than a general tax and would allow visitors to contribute to the cost of attracting events and supporting the regional economy.
Auckland Council previously estimated that a charge of between 2.5 and 3 percent on short-term accommodation could raise approximately $27 million annually. The money was expected to support major events and destination promotion without placing the full cost on Auckland ratepayers.
The position within the coalition is not yet entirely clear. New Zealand First leader Winston Peters said the Auckland and Queenstown arrangements, including investigating accommodation levies, remained on the table.
Peters said the Auckland agreement required the Government to consider the measure in 2027 and that nothing had changed. This leaves a distinction between National’s election policy and the commitments of the current coalition Government.
Queenstown Lakes District Mayor John Glover described National’s decision as a complete U-turn. He argued that tourism communities still needed the ability to recover some of the costs created by large visitor numbers.
The funding question is particularly important for accommodation operators. Hotels benefit from events, destination promotion and well-maintained visitor infrastructure, but they would also be responsible for collecting and passing on any accommodation charge.
The design of a levy would therefore matter. Industry concerns have previously included whether it would apply equally to hotels, motels, hosted accommodation and short-term rentals, whether domestic guests would be charged and whether revenue would remain in the region where it was collected.
ACT has proposed an alternative Local Tourism Dividend under which councils would receive $1 for every commercial guest night. The payment would come from existing GST and visitor levy revenue rather than a new charge.
National has said it will continue to support councils and tourism regions through another approach. Until that alternative is detailed, however, councils and accommodation operators are left with the same commercial question: who will fund the events, promotion and infrastructure needed to generate and manage visitor demand?
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