Franklin businesses based in the hospitality industry are being encouraged to have their say on new 'accommodation tax' that Auckland Council are wanting to impose through the Annual Budget plan.
The council currently spends $27.8 million on visitor attraction and major events funded by general rates from Auckland ratepayers. At present all ratepayers contribute around two per cent of their rates to fund this expenditure.
The council proposes to free up this general rate by funding visitor attraction and major events with a targeted rate on accommodation providers.
It has been suggested that by imposing this tax, the ratepayer funding that is freed up will be available for new infrastructure investments, including transport infrastructure projects.
However, in Franklin, questions have been raised as to how much the current ATEED promotional funding actually benefits local business, and whether the new tax is going to be more detrimental on affordability for businesses.
"The connection between who is paying the rate and who is receiving the benefits is also questionable. Auckland commercial accommodation providers enjoy only 10% of the Auckland visitor spend. The other 90% is spread across food and beverage, passenger transport, cultural, recreational and gambling, tourism and retail. Also, it does not take into account accommodation providers like AirBnB, Bookabach etc, who benefit from the visitor economy but are not included in the targeted rate," says Rachael Shadbolt, GM Accommodation for Hospitality New Zealand.
The targeted rate is based on the capital value (CV) of the building and has no direct link to the visitor numbers the rate is suggested to be targeting.
For example, if the capital value on a hotel is worth $1million, businesses would times that amount by 0.01394584, and the answer would be the increase the business would need to pay.
Business associations have described the rate as 'unaffordable' for the local economy.
"The Waiuku Business and Development Association are really trying to focus on growing tourism in the area and this gives absolutely no incentive for developers to invest in accommodation ventures due to the huge rate costs," says Waiuku Town Manager, Sharlene Druyven.
"I feel that it is very ambiguous of Council, and that many businesses in our hospitality industry are not fully aware of the proposed increase and the effects it will have them."
Auckland Council has asserted that it assumes the targeted rate will be passed on to visitors.
"It has been said that the increase could be passed onto the customers by increasing the nightly rate by $6-$10 per night. However, this rate is based on accommodation properties, such as motels, hotels and camp grounds, being full the whole year round, which isn’t the case especially out here in Franklin."
The proposed rate is still yet to be confirmed, however, the cut-off date for submissions against it is fast approaching. Feedback and submissions must be made by Monday 27 March, 2017.
To make a submission, visit www.shapeauckland.co.nz or contact your local business association for more information.