A healthy visitor economy is vital to the regions but local government support is essential, the Tourism Industry Association New Zealand (TIA) says.

In its submission to Local Government New Zealand’s Local Government Funding Review, TIA says local government plays a central role in regional economic development.

"The visitor economy generates jobs and income, as well as contributing to the vibrancy of communities. Only a fraction of the money international and domestic visitors spend is in places commonly considered tourism-specific, such as accommodation, activities and attractions. They also spend in shops, cafes, restaurants, supermarkets and petrol stations," TIA Chief Executive Chris Roberts says.

Many regions rely heavily on visitor expenditure, ranging from $75 million a year in Gisborne, to $4.8 billion a year in the Auckland region.

Local government investment in assets such as stadia, conference facilities, parks and museums brings great benefits to both visitors and ratepayers, Mr Roberts says.

"However, the tourism industry acknowledges that growth in visitor numbers is putting pressure on areas with small rating bases like Kaikoura, Queenstown and the West Coast. We want to work with local government to find solutions to the fiscal challenges being faced by councils," he says.

TIA is open to the possibility that visitor levies could be introduced in some regions but only if they are supported by the local community and are re-invested in tourism-related projects.

TIA’s submission points out that ‘bed taxes’ are inequitable as they target only those visitors staying in commercial accommodation, not those staying in private homes or renting holiday homes. They are also costly for accommodation providers to administer.

"Bed taxes can work in places like Queenstown where many visitors stay in commercial accommodation, but they don’t work in areas like Thames-Coromandel where visitors tend to stay in rented accommodation or their own holiday homes," Mr Roberts says.

"This highlights the difficulty of introducing a national policy. Any visitor levy regime should be decided at the local level, on a case by case basis."

TIA’s view is that other rating models set out in the LGNZ paper, such as development contributions, local income taxes, user charges and regional fuel taxes, should also be considered as ways to fund destination marketing and visitor infrastructure because local residents also benefit.

To read TIA’s submission, go to www.tianz.org.nz/main/local-government