Tuesday, 22nd October, 2019
As previously advised the Chamber has been attempting to engage with local and central government to ensure that the visitor levy policy is equitable across all parts of the accommodation sector. This development process work has not yet begun.
Designing a new tax, or levy, is a complicated thing. We are seeking to ensure that the price dynamism and opaqueness, features of the accommodation market, is well understood and respected.
We remain concerned that the levy may be commission bearing and be subject to GST, therefore increasing the cost of collection to the accommodation providers and eroding margin. There many other devilish details like how we handle freedom campers and how collection will be enforced in the peer-to-peer market.
Additionally, we want our members to be given the opportunity to understand more fully how the collection will be governed and what QLDC obligations are under the relevant local government act in this respect.
My understanding of the work thus far presents more questions than answers however, I supply the following update for your review.
As of last week
The timeline being proposed for this bill being written and passed is in the first half of next year (before the election).
The proposed Queenstown visitor levy is a local bill led by QLDC, however with central government support. It is not a parliamentary bill. The primary central government department handling the bill so far is Department of Internal Affairs (DIA). They are liaising with QLDC, MBIE, IRD and Ministry of Urban Development.
DIA are not progressing any action on the levy until it is clear whether QLDC or IRD will be the collection agent. This is a central government decision and once this has been decided a joint recommendation on the preferred collection agent will go to government. This work is scheduled to take another week or two.
Establishing who is collecting the levy is important. The collection agent will have an impact on how the policy will be drafted and the degree to which Parliamentary Council Office (PCO) will either write or oversee the legislation drafting. Work on policy design cannot commence, until it is clear who is collecting. The PCO is the government agency that drafts and publishes legislation. You can read more about their approach here
I have been advised by a DIA representative that, because it is a local bill, the generic tax design policy process may not apply in the design.
I have spoken with QLDC CEO Mike Theelen and a DIA representative and have made it clear that the Chamber feels it is essential to have expert sector input into the design of the levy. We are concerned the poor design will impact on the quality of collection and the accommodation providers alike. I have outlined the complexity of the pricing models and the need to ensure equitable application across the accommodation sector.
I have also asked Mike Theelen to provide accommodation members with a verbal briefing on progress, with no response at present, although I suspect he feels that this may be more useful once the collection agent has been decided (my opinion). I will continue to seek this briefing for members who are interested.
Representing accommodation members
The Chamber recognises that there are many members of the accommodation community who do not agree with the proposed accommodation visitor levy. They are being ably represented by Tourism Industry Association (TIA) and the Hotel Owner’s Group (nationally) and locally by the Tax Equity Group. Most of these groups do recognise the need to improve funding of infrastructure locally and the benefit that this will have commercially and socially.
However, they argue that applying a levy only to accommodation providers means that their businesses and their guests are being treated inequitably and there are more appropriate ways to fund local infrastructure (debt, rates, wider levies, GST).
The Chamber is respectful and understanding of the accommodation sector’s right to defend their approach.
However, it is our view that if this approach is unsuccessful, they may forgo the ability to effectively influence the design, and if the policy is implemented, it will leave our accommodation members in Queenstown vulnerable to the impact of poorly designed policy.
Many of our accommodation members have been very specific with me that they do not wish The Chamber to engage with government at all given the intention to levy accommodation providers. I have been clear with all dealings with government officials that I do not represent all accommodation members.
However, there are others, including those in non-accommodation sectors, who are wanting the Chamber to continue our work. There are many in the Queenstown community who are also in agreement with implementing this type of levy to fund infrastructure.
Whatever your opinion
Whatever your opinion on our approach, I trust I have clearly outlined the rationale for why the Chamber is working the way we are.
I am seeking expert sector support to ensure that the sector is best placed to represent themselves during the accommodation levy policy development process. If you wish to contribute, please let me know.
On a final note, if the levy is implemented and the accommodation sector is tasked with being the collection agent, I suggest that the wider Queenstown community owes them a debt of gratitude – they will be collecting on all our behalf – and we owe them the respect of ensuring that the collection obligations are as light as possible.
Comms-Free update: Apologies for any grammatical hiccups. Written by Chamber CEO Anna Mickell.