National has announced a new policy to share revenue from the International Visitor Levy with councils, as an alternative to the bed tax it previously promised to explore, writes Henry Oliver in today’s excerpt from The Bulletin.
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At an Auckland hotel yesterday, National announced it will redirect hundreds of millions of dollars from the International Visitor Levy (IVL) to councils, as an alternative to the bed tax it previously committed to exploring, The Post’s Nick James reported. The party had faced criticism after its “no new taxes” pledge killed off the idea of a bed levy on hotel rooms, which was part of regional deals with Auckland and Queenstown.
Instead, National would “reset” the IVL. From July 1 next year, councils would receive the money left over from the scheme after it provided $100m per year to the Department of Conservation and $50m per year to a tourism priorities fund. Over four years, that amounts to nearly $400m for councils, distributed based on the number of international guest nights in each region. In the first year, Auckland Council would receive about $19m, and Queenstown Lakes District about $17m.
‘No new taxes’ or ‘no new levies’
The policy has reignited debate over what constitutes a tax versus a levy. Auckland mayor Wayne Brown, who has been outspoken in pushing for a bed tax, said in a statement that the IVL funding was “a step in the right direction” but still about $8m short of what a bed tax would deliver for Auckland, RNZ reported. “This will still leave the future of some events like the ASB Classic, All Blacks tests, State of Origin, SailGP and the Writers Festival at risk.” Brown maintained that a bed-night levy was “a fair user charge” and that under the Auckland deal, “central government has an obligation to explore a dedicated bed-night levy.”
Queenstown mayor John Glover told RNZ a bed tax would have delivered his district $40m — more than double the $17m from National’s IVL plan. He also raised concerns that the IVL is a one-off payment regardless of how long a visitor stays, and noted there is no national accommodation register to account for stays in Airbnbs and similar accommodation. Central Otago Mayor Tamah Alley welcomed the policy as a “great step in the right direction” but said she remained supportive of a nationwide bed tax.
Coalition tensions
Act leader David Seymour claimed National’s policy was “suspiciously similar” to Act’s own Local Tourism Dividend, and said the two policies were essentially the same, RNZ reported. NZ First leader Winston Peters criticised the policy, saying it was “not ring-fencing the visitor levy” but simply “reallocating the operating allowance to ensure they can continue to use a convenient campaign slogan.”
Labour’s Glen Bennett condemned National for initially railing against the visitor levy when it was introduced, saying: “Now, after leaving councils under pressure for three years, National wants credit for giving them a share of the money – exactly what it opposed when Labour introduced the levy.”
Tax or levy? Does it matter?
Today on The Spinoff, Emma Gleason has explored the semantic distinction between a tax and a levy, noting that while taxes are universal and apply to nearly everybody, levies are more targeted and the revenue is ring-fenced. Tax specialist Terry Boucher told Gleason that in the eyes of tax law, there is no difference: the Tax Administration Act defines a tax as meaning a tax, levy or duty of any type. Geof Nightingale, an independent tax consultant, likened the subtle difference to “dancing on the head of a pin.”
The distinction matters politically. National’s “no new taxes” pledge has been used to justify killing the bed tax, even though it was more accurately a levy. As The Spinoff noted, calling a levy a “tax” is technically inaccurate – but in politics, the label often matters more than the substance.
