1 Jun 2017

Councillors back Goff's 'bed tax' proposal

7:49 pm on 1 June 2017

A controversial targeted rate for Auckland accommodation providers appears likely to go ahead, after councillors voted 11-8 in favour of it.

A woman backpacker stands next to her luggage and a window in a hotel room.

If the rate was passed on, it would increase motel prices by $1 to $3 a night and hotel rooms between $3 and $6. Photo: 123RF

Mayor Phil Goff has said he hoped the rate - which has become known as the "bed tax" - would cover about half the cost of staging major events in the city and tourism promotion.

Phil Goff on the day he was elected Auckland mayor. 8 October 2016.

Auckland Mayor Phil Goff Photo: RNZ / Diego Opatowski

Mr Goff said nearly $14 million a year would be raised from the rate, and accommodation providers could pass on the cost as a surcharge to tourists.

It would mean motel prices would go up approximately $1 to $3 a night while hotels would go up between $3 and $6.

The move has been strongly opposed by the hospitality sector, which said it got only 10 percent of the total spend from tourists, and that it should not bear the full burden of the costs.

And Hospitality NZ said it was "devastated" by the vote.

Mr Goff said this afternoon it was about a fair sharing of costs for events that benefited the accommodation industry.

"Why should the general ratepayers be landed with the bill for which the hotel industry makes hundreds of extra dollars per room per night during the events that we organise on their behalf?"

He said he had consulted with the industry and sought legal advice and the move was not illegal.

Tourism Industry Aotearoa has said it has received legal advice that it would be illegal to pass the extra cost on to customers.

This afternoon's vote followed a heated debate in the Finance and Performance Committee.

Councillor Christine Fletcher, who opposed the rate, said it was a desperate move.

"To me this has been clumsy and it's flawed and I think the net result of it will be that government won't want to have a bar of it, and we will never get around to getting the visitor levy."

Councillors also voted in favour of a 2.5 percent rates rise and a living wage for council workers.

Mr Goff told councillors they could not keep burdening ratepayers with high rate increases to pay for the city's ever-growing infrastructure needs.

He said the council was at the limit of its debt-to-revenue ratio, and borrowing was not the answer.

The council's governing body approved the targeted rate as part of the annual budget in a second vote this afternoon.

It will now go to a final meeting to be adopted at the end of the month.

Proposal 'not fair and equitable' - Hospitality NZ

Hospitality NZ general manager of accommodation Rachel Shadbolt said she was "devastated" by the vote.

"Would you like to be waking up on the 1st of July and discover that you've got $20,000 of extra rates that you have to pay to council?"

She said an inner-city motel with a capital value of $3.6m would now have to pay the targeted rate of $30,000 on top of the $24,000 they already paid in commercial rates - a 125 percent increase.

She said accommodation providers would likely absorb the cost and some would need to take out loans to service it.

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