Councils that host international tourists would get a direct cut of the levy those visitors pay at the border under a policy National announced in Auckland on Tuesday, replacing the bed tax the party had previously agreed to consider.
Prime Minister Christopher Luxon, Finance Minister Nicola Willis and Tourism Minister Louise Upston released the plan at a hotel in the city whose mayor has been the loudest critic of National’s decision to walk away from a bed-night levy. The policy would apply from 1 July 2027 if National is returned to government at this year’s election.
Under the plan, the International Visitor Levy would stop flowing into general government coffers. Instead $100 million a year would go to the Department of Conservation and $50 million a year into a new Tourism Priorities Fund, with everything left over paid out to councils according to their share of international visitor guest nights. That residual starts at $86 million in 2027/28 and rises to $106 million by 2030/31, which the party estimates at about $385 million for councils over the first four years.
Auckland Council would be eligible for roughly $19.1 million in the first year and Queenstown Lakes District Council for about $17.1 million. Every territorial authority hosting overseas visitors would receive something. National also committed to leaving the levy itself untouched for at least three years, after the coalition lifted it from $35 to $100 in 2024.
“As visitor numbers recover and continue to grow, the communities hosting those visitors should share more directly in the benefits of tourism success,” Willis said in the announcement. She said funding would reach councils around two years earlier than a bed tax could have delivered it.
Upston framed the choice as one about who pays. “We know domestic visitors generate nearly twice as many guest nights as international visitors and account for around two-thirds of all guest nights across New Zealand,” she said. A bed tax, she argued, would “disproportionately impact New Zealanders booking a weekend away, whether that’s for a sports event, a family funeral or to visit friends”.
The announcement follows Luxon’s pledge in August to introduce no new taxes, which killed off the bed-night levy that had formed part of regional deals signed with Auckland and Queenstown. Both cities had been counting on it.
Auckland mayor Wayne Brown, who has spent weeks attacking the backdown, gave the new policy a qualified welcome and an immediate complaint about the size of it. “This National Party announcement is a step in the right direction, but we are still around $8 million short, and it’s not yet a long-term solution,” he said, putting Auckland’s annual need for major events and destination marketing at $27 million. He warned the gap leaves events including the ASB Classic, All Blacks tests, State of Origin, SailGP and the Writers Festival at risk, and said a bed-night levy remains “a fair user charge”.
In Rotorua the reception was warmer. Mayor Tania Tapsell, a former National candidate, told RNZ the news came as a “welcome surprise” because councils would decide how the money was spent. “We said we want to make the decisions for our communities and that’s exactly what’s going to happen,” she said. Rotorua, a district of 78,000 people that hosts about two million visitors a year, would get around $20 million over four years. Tapsell conceded a bed tax would have raised more but said using the border levy avoided charging New Zealanders. “This is going to help us without hurting the pockets of those domestic visitors.”
Queenstown mayor John Glover was blunter about the shortfall, telling RNZ’s Checkpoint a bed tax would have delivered his district $40 million rather than $17 million. He also questioned the mechanics. The levy is a single payment regardless of how long someone stays, he noted, and there is no national accommodation register capturing nights booked through Airbnb and similar platforms, so councils could be short-changed on the guest-night counts the formula relies on.
Central Otago mayor Tamah Alley called it a “great step in the right direction” while noting her district’s visitors are mostly domestic, so the policy would “probably not” deliver much there. Gisborne mayor and Local Government New Zealand president Rehette Stoltz said the numbers looked promising but “the devil will be in the details”.
The industry response was similar. Sudima operating officer Les Morgan called it a good first step but pointed out that redistributing existing revenue is not fresh investment. With the government targeting 4.7 million visitors by 2034, he said, “the money is definitely welcome but we most definitely need extra funding”.
National’s coalition partners were less generous. ACT leader David Seymour said the plan was “suspiciously similar” to the Local Tourism Dividend his party released last month, and that because the levy is already committed spending, National would have to cut something to fund it. “The two policies are the same,” he said. NZ First leader Winston Peters told The Spinoff’s Bulletin the policy was “not ring-fencing the visitor levy” but “reallocating the operating allowance to ensure they can continue to use a convenient campaign slogan”.
Labour’s Glen Bennett pointed to National’s history with the levy, which it opposed when Labour introduced it in 2018. “Now, after leaving councils under pressure for three years, National wants credit for giving them a share of the money,” he said.
Because the levy is already allocated, redirecting it leaves the Department of Conservation short over the forecast period, and National says the shortfall would be covered by more than $105 million drawn from future operating allowances. That is the detail Seymour has seized on and the one voters will hear most about between now and polling day. Brown, meanwhile, has signalled Auckland is not finished, promising a formal announcement of its own.
Tourism funding is one of a long list of issues on the ballot this year. If you are still working out where the parties sit, our voting tool lets you compare their positions side by side.
What do you think, should visitors pay at the border or at the hotel door, and is $385 million over four years enough to fix the pressure on tourist towns? Have your say in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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