Opinion: How about bed tax and GST?


It’s difficult to get people excited about local government, so let’s start with an attention-grabber.

Apparently, kissing boosts the immune system and lowers stress. One million bacteria (of which there are 600 types) exchange hosts. Wow! Who’d have thought? A mixed blessing indeed!

Another mixed blessing is local government. Sometimes it works. Too often it does not. In the ‘does not work camp,’ sits: funding infrastructure.

Instead of enjoying first-world benefits which our district’s revenues ought to make easily affordable, we languish as an ‘also ran’ in the international order. So – how do we fund what ratepayers alone, cannot?

I’ve long been an advocate for a bed tax, yet the community seems split. Those who own the beds fear that accommodation providers might not contribute equally, and that increased taxes will result in a decline of custom.

A recent advert was commissioned in the ODT on behalf of 25 such providers and many thoughtful issues were raised. This column does not permit a full summary of the pros and cons, so let me be succinct in how I believe our district ought to proceed.

I remain a bed tax supporter. Every Western country in the world has a bed tax. From France to Florida, Switzerland to Seattle, London to Lichtenstein. Why should we be any different? By European standards Queenstown is cheap, and there is no reduction of tourists due to European bed taxes. The challenge is: how to equitably raise that revenue, at minimal collection cost.

However, we are so far behind with infrastructure investment, that we need more than just a bed tax. In Australia, each state, every year, is refunded 75 per cent of that state’s GST.

In New Zealand each province receives the breadcrumbs of that tax. Even our rates bill is subject to a central government tax. It’s an absurd situation where the tax itself is taxed a second time via GST.

The GST tax take from our region is over $200 million a year. Seventy-five per cent of that is $150m which would go a long way towards reducing road accidents by improving our roads, terminating the late afternoon and early morning rush-hour vehicle queues, making our lakes and waterways swimmable again in summer, improving our CBD with adequate parking on the edge of town, and prettying up the place we call home.

Central government has a history of robbing Peter to pay Paul. In the commercial world it’s called a Ponzi scheme, and it’s illegal. For years the Clark Labour government stole petrol taxes to prop up welfare shortfalls elsewhere, and our once excellent roads have declined as a consequence.

National was no better, advising that infrastructure costs be sheeted home to commercial ratepayers in the regions. (Last time I looked, a typical commercial ratepayer paid double the amount levied on a residential ratepayer).

Maybe it’s time our local council was less collegial with Wellington, and a bit more militant. A bit of GST ambition would help too. It’s the squeaking wheel that gets the oil, and council is a bit quiet in the squeaking department.

The provincial growth fund has one billion dollars to spend. So far, all the funds have gone to the North Island, with Northland taking the lion’s share. Winston Peters says: “They had projects ready to go.”

That being so, where was our council with our ‘projects to go’?

Were they asleep at the funding wheel? We ought to be told.


Ramsay is a keen observer of the Wakatipu Basin