New Zealand is set to announce a tourism levy, following a promise last year to bring in a $25 NZD tax on international visitors.

The country’s tourism sector is going gangbusters, but, as with many places that people want to visit, there’s pressure on local governments to foot the cost of infrastructure while receiving little in return – something it’s hoped the levy will address.

Annual visitor numbers to NZ are expected to climb from 3.7 million to 5.1 million in 2024, and local government infrastructure is straining to keep pace. 

“We’ve got billions of dollars ahead of us in the next decade, say, and we can see quite clearly that our funding base, our property tax [revenues] won’t be a sustainable source of that,” Dave Cull, President of LGNZ, tells intouch. 

“If you move over to the tourist areas, we’re looking for alternative funding sources like local taxes, our share of GST." 

LGNZ has suggested measures including “a local tourist levy, such as a bed tax or visitor fee.”

Visitors are using infrastructure in places that often have tiny populations and thus tiny abilities to raise funds.

Take Franz Josef, a little town on the west coast of the South Island with a popular glacier. It has less than 300 ratepayers, but saw more than 700,000 visitors in 2016.

“In the summer there’s 8000 visiting; they might be there to see glaciers or the lakes,” Cull explains.

“A wastewater plant has to be built to a capacity to deal with 8000, not 250. Yet clearly, the tax base won’t sustain that.”

There’s a problem here, and in other stretched LGAs facing expanding tourism numbers, in the disconnect between those benefiting from and those paying for public infrastructure.

As Cull puts it, the central government gains GST and tourism employees’ income tax, while the local government does not, but still has to resurface the pavements, ensure the wastewater plants can cope, and build the public toilets. 

Visitor numbers have stretched resources at Byron Shire Council, which has a reported infrastructure backlog of $40 million. The northern NSW tourist mecca, according to the council, has 32,000 residents, 15,000 ratepayers, and 2.1 million annual visitors.

Mayor Simon Richardson has proposed a bed tax, calling this a “no-brainer” to deal with the infrastructure shortfall, though this is unsupported by NSW government. According to Richardson, the state and federal governments are focussed on growth and not in coping with this.

"The reasons why people may not come again is poor toilets, poor roads, not enough car parking," he told the ABC.

Tasmania feeling the pinch 

Tasmania has also seen booming tourism numbers, as well as tension between different tiers of government in how to approach these.

The island state reported a 19% spike in overseas visitor numbers for the 12 months to December.

One destination, Bruny Island, is all too familiar with the disagreements over whether or not to tax tourists to pay for the infrastructure they use. The 50 kilometre-long island saw international and interstate visitors swell from 101,190 in 2014-15 to 147,807 in 2016-17.

The island of about 800 full-time residents is “generally are in favour” of the economic benefits of tourism, says Kingborough Mayor Steve Wass, but “I suppose Bruny Island, you could say, is being loved to death.”

Wass’s Council covers 717 square kilometres south of Hobart, including the island. It supported a resolution for a landing fee for the Kettering to Bruny ferry trip, which was first raised by a residents’ group roughly a decade ago.

“For the simple reason that during the high summer peak periods, some of the infrastructure couldn’t cope and they [thought] why should their rates and taxes go into building infrastructure – much needed over those summer months – that they as a community didn’t use or there was no need for it if there was no tourists,” Wass tells intouch. 

To collect and use the landing fee would require state government support, which is lacking.

There are examples from around the world of governments charging levies to tourists to fund the infrastructure being used, such as New York, Paris and Switzerland.
 
Visits to Australia are predicted to grow by more than 30% in the decade after 2016, according to a report in April from the Tourism and Transport Forum Australia. Making sure infrastructure – and popular though sensitive local environments like Bruny Island – can last might require new approaches. 

Wass suggests it depends on what you value.

“To go to Iceland I think even your airfares are much higher; your accommodation costs are higher,” he says.

“And what’s happening there is that they’re charging a premium for tourists so that that can be put back into infrastructure, and to reduce the number of tourists so that Iceland doesn’t get loved to death.”