Legal snags mount for Goff's proposed rates increase for hotels and motels

Tourism Industry Aotearoa chief executive Chris Roberts says "this is also quite a different situation from public holiday surcharges applied by some hospitality businesses”

Even if Auckland Council votes on Thursday to slap a targeted rate of 150% on hotels and motels,  a legal opinion says the accommodation providers won’t be able to recover the cost from guests.

A new legal opinion from Lane Neave Lawyers for Tourism Industry Aotearoa says adding a surcharge to cover council rates potentially breaches both the Fair Trading Act and the Commerce Act.

Although the council’s budget document suggests the cost of the rate could be passed on “as occurs with bed night taxes in many other international cities,” Lane Neave’s opinion leaves no doubt it can’t and cites legal precedents to support its contentions, TIA chief executive Chris Roberts says.

“It’s clear this is also quite a different situation from public holiday surcharges applied by some hospitality businesses.”

Hotels, motels and other commercial providers in Auckland city are set to be hit with the proposed rate, which would be the new source of funding for the city’s tourism and event marketing efforts. Mr Roberts says the sector will be paying 100% of the cost, even though it receives only 9% of the visitor spend in Auckland.

“Mayor Phil Goff and the council have been insistent the targeted rate could be added to room costs as a surcharge, despite the commercial accommodation sector being clear this couldn’t happen.

“Now we have legal advice that leaves the situation in no doubt. Adding a surcharge to cover council rates potentially breaches both the Fair Trading Act and the Commerce Act. Lane Neave’s opinion cites legal precedents to support its contentions,” he says.

TIA is sharing the legal opinion with Mr Goff and councillors before their targeted rate vote.

Mr Roberts says the tourism industry wants the council to reject the targeted rate. “The proposal is based on bad information and a poor understanding of how the visitor economy works.

“We want to work with the council to find a fair and sustainable way for the commercial accommodation sector to make an appropriate contribution to the city’s visitor and event promotion activities,” Mr Roberts says.

Read the Lane Neave legal opinion here.

RELATED VIDEO: Local government consultant James Bews-Hair, Russell Bartlett QC and councillor Richard Hills grade Phil Goff's performance as Auckland mayor, including his targeting of accommodation providers (Apr 19)


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What a lot of selfserving legal gobbledygook! Whether or not you agree with Mayor Goff's proposal he should not be deterred by this opinion. Hospitality providers can set their charges however they like. They would be stupid to add on an identifiable item as a bed tax. They do not have to identify how much of their charge is for power laundry cleaning etc so why single out this item?

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Remember this is the same council that reduced water charges a little bit. And at the same time added on a usage based wastewater charge that was far more expensive than the water charge. It didn't stop Len Brown during his first term as Mayor putting out a press release saying that water is now cheaper under the super city.

Watercare still do the same thing today. So that shows that the council operates in some sort of parallel universe where they think that adding a compulsory surcharge instead of raising the base price of something means that you actually haven't raised the price.

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What's really needed here is an indepth review of ATEED, and an honest discussion as to whether Council should be in the business of marketing Auckland, at all! Seems Council takes on many more roles than it should, and then pings the ratepayers and businesses to pay for the empire building. Businesses are quite capable of marketing them selves and the government tourism board does a good job of marketing the country. Leave it at that.

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Agree - straight out egotistical empire building with other people's money.

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Personally I think city councils as such are an outdated concept from a bygone era. What are they these days anyway? Just a glorified middleman, run by any tom, dick or harry that puts them-self forward for a salary top up. No skills required. The govt should can the lot of them, and just get a professional accountancy firm under heavy regulation to run the place at a fraction of the cost that is charged now.

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Funny that, just came across an article the other day which show that some big businesses do expect ratepayer handouts, and for the council to do their marketing for them. We probably don't know half of the lobbying business does behind the scene for the council dollar.
So maybe it is more of a case they like the marketing being done but only if the ratepayers pay for it?
"The Northwest Shopping Centre wants ratepayer cash to "activate the centre and the community", senior marketing manager Linh Luong says."
Interesting to note Stride just reported a 56.9m Net Profit.
http://www.stuff.co.nz/auckland/local-news/western-leader/92830425/north...

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You are right Ricardo, I believe that Helen Clarkes administration granted a power of general competence to local authorities allowing them to undertake activities outside their core responsibility.This has cost ratepayers in Auckland Hamilton and Christchurch dearly and in my opinion such power should be removed until such time councils can demonstrate over a continuous period of say 5 years they have delivered their core responsibilities on time, on budget and rates have risen no more than CPI.

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No reason we should have a bit of "user pays" in the tourism industry. Or shall we just keep on paying for tourists medical bills out of the goodness of our own hearts, for example?

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