29 May 2017

Phil Goff: Absolutely nothing to stop hotels passing on 'bed tax'

8:49 am on 29 May 2017

Auckland mayor Phil Goff is dimissing claims from the tourism industry that a 'bed-tax' for hotels and motels is illegal.

The Hilton Hotel in Auckland with the Sky Tower in the background.

Phil Goff's rates hike has been strongly opposed by the hospitality sector, which says it gets only 10 percent of the total spend from tourists and shouldn't bear the full burden of costs. Photo: 123RF

The council will vote on its next budget on Thursday, including Mr Goff's planned special rate for the accommodation sector.

Mr Goff hopes it will bring in $14 million to cover half the cost of staging major events in the city and tourism promotion.

He has argued accommodation providers can pass on the cost as a surcharge to tourists.

But Tourism Industry Aotearoa (TIA) chief executive Chris Roberts said its legal advice was that operators could not pass on the extra cost.

"This is not actually a bed tax, it's an additional rate on the capital value of the property - it's just another expense of running the business.

"The courts have been quite clear you cannot add an operating expense on top of the bill as a surcharge."

A surcharge would breaking the law under the Fair Trade Act, and it would be a breach of the Commerce Act for the industry to agree on how much to charge a customer.

Hotel owners were likely to challenge any targeted rate in the High Court. "They have legal advice already that the council hasn't followed the law, hasn't followed it's own policies and that there are numerous avenues to challenge the rate if it does in fact get passed by the council."

Paul Columbus, head of the Tourism Industry Aotearoa's Auckland hoteliers group, said knew of some who weere planning on taking the matter to court.

"The sector is prepared to stand its ground. We're not prepared to be walked over. We want to be fair and pay a fair share.

"Tourism is a broader sector than just the accommodation players."

Goff: council 'acting within law'

Auckland's Mayor Phil Goff on his proposal to introduce a visitor levy

Phil Goff Photo: RNZ / YouTube

Mr Goff said advice from both the Council's own legal advisors and law firm Simpson Grierson showed there was "absolutely nothing" to prevent the accommodation industry passing on the rate.

He agreed hotels couldn't collude to fix prices - but said there was no need to do so when putting in the rate.

The mayor estimated most hotels could cope with adding up to $6 per bed night, and motels with a $2 surcharge.

"These hotels think nothing of passing on $300 or $400 a night extra payment when we run an event like the Lions tour or the World Games."

He said council's lawyers have told councillors there was no legal obstacle to voting for the new targeted rate on Thursday, and if it went to court, the council would defend it.

"Our legal advice says we are acting on a sound judgement and within the law.

"I think councillors should go with what their constituents are telling them, not what a well funded lobby group is saying."

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