The New Zealand Court of Appeal sided with the accommodation industry and ruled that the Auckland Council’s controversial ‘tourist tax’ was invalid and could not be enforced. work, setting aside the decision of the High Court.
The decision was unanimously welcomed by the Aotearoa Hotel Council (HCA) and its 350 member hotels, with HCA Strategic Director James Doolan saying the court’s decision should be quickly implemented by the Council of Auckland and that the industry was ready to work to find a suitable solution. for both parties.
“The issue of financing tourism infrastructure is complex and nuanced. HCA sympathizes with the Auckland Council’s funding constraints, even though APTR was clearly the wrong answer, ”said Doolan.
“Any new funding regime must be based on international best practices and sound research. Tourism is an internationally competitive business. The fundamental problem of financing tourism has not changed in the four years since the introduction of APTR.
The much-maligned APTR, or Accommodation Provider Targeted Rate, was a financial tax established in 2017 by Auckland Council and Auckland Tourism, Events and Economic Development (ATEED), for which hotels would have paid 100% when they had received only about 10% of total visitor spending in New Zealand. Upon its announcement, the tax was widely condemned by the hotel industry and members of the New Zealand government, including then Tourism Minister Paula Bennett.
APTR was suspended, initially for 12 months, in April 2020 in an effort to help hotel owners navigate what were then the first months of a largely unknown pandemic.
Led by CPG Hotels Commercial Accommodation Rate Payers Steering Committee Chairman and Director of Hotel Operations, Terry Ngan, and backed by hospitality industry leaders across town, the hospitality industry’s primary argument against the tax was the lack of direct benefits that hotels would receive in return to pay for it. After reviewing the process for establishing APTR, this view was supported by the Court of Appeal. In a statement following the ruling, Ngan suspected that this may not yet be the end of the case.
“We suspect the Council may well appeal to the Supreme Court given previous statements by the mayor (Phil Goff) on APTR,” Ngan said.
“As the tourism and accommodation industries have yet to recover from the pandemic and the Council’s finances are strained, we hope that common sense will prevail and that they will not. As taxpayers, we would prefer the mayor and council to channel their efforts to work with the industry on a solution that not only reflects the decision of the Court of Appeal, but that is fair and equitable for all involved in the process. right moment.
Doolan added that the Association would continue to call on local councils across New Zealand to work with itself and other stakeholders to create a “fair, reasonable and nationally approved funding model for the tourism economy “.
Before the COVID-19 pandemic, more than 20% of New Zealand’s exports were made up of international tourism, with the central government collecting NZ $ 3.9 billion annually from GST revenue and $ 3.1 billion New Zealand dollars on tourism-related taxes, including corporate income tax and excise tax.
“Central government tax revenues on tourism are not fully reinvested in the sector, nor are they sufficiently shared with local authorities to support investments in critical infrastructure,” Doolan said.
“As a result, New Zealanders are frustrated with overcrowding and local authorities have turned to new fundraising techniques, such as APTR, to fill the funding gap. International and domestic tourists are already “paying their way” in New Zealand and the 15% GST is imposed on international tourists with no exceptions or discounts.