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Auckland mayor's bed tax squeaks through

NZ Newswire logoNZ Newswire 1/06/2017

A proposed tax on hotels to fund Auckland's tourism promotion has been narrowly voted through by the super city's councillors.

The "bed tax", championed by Mayor Phil Goff, was approved 11 to eight votes - with one abstention - during a debate on the city's annual budget by the Finance and Performance committee on Thursday morning.

Councillors also voted to recommend the 2017-18 rates increase be 2.5 per cent, 18 votes to four.

Both will now be voted on for a final time by the council's governing body later in the day.

Targeted at hotels, motels and backpackers, the council hopes the targeted rate on accommodation - based on capital value - will bring in about $14 million a year to help cover the cost of major events and promotion.

It's drawn the ire of the hotel industry, which said it was being made to wear the full cost, despite the sector only receiving about 10 per cent of money spent by tourists.

Some businesses would see up to 150 per cent to 300 per cent rates rises as a result, Accommodation NZ said.

Mr Goff on Thursday urged councillors to vote in the interest of ratepayers and "not on the behalf of organised lobby groups".

"Too often lobby groups often prevail over the wider community," he said, adding ratepayers could not continue to wear high rates rises.

The rate would only increase room prices by a few dollars a day depending on the kind of accommodation.

Objections earlier forced Mr Goff to tone down his original plan for $28 million in taxes and to exclude sites at the fringes of Auckland.

But councillor John Watson argued while that meant the damage had been reduced - and agreed rate payers shouldn't be paying the bill for tourism promotion - he said the rate was not properly targeted and fundamentally unfair to businesses.

In a joint statement, Tourism Industry Aotearoa and Hospitality New Zealand called the result "disappointing" and said the industry was still offering to work with council to find an alternative approach to fund the costs.

"An unbudgeted cost increase of this magnitude would create serious challenges for any business, and Auckland's motels and hotels are no exception," HNZ Chief Executive Vicki Lee said.

Legal opinion obtained by Tourism Industry Aotearoa questioned whether the cost could actually be passed on to consumers without breaching the Fair Trade Act.

Mr Goff told councillors on Thursday legal advice the council had received said the proposal was "in order and are within our statutory authority".

Businesses could pass on the costs in the same way as they did all others, he said.

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