PM shoots down Auckland’s renewed calls for a bed tax

Wednesday, 13 August 2025

Pleas for a “shot in the arm” for Auckland have landed flat in Wellington, where the Government has shown no interest in offering short-term relief.

Auckland business leaders have renewed their call for a bed tax, asking for the ability to levy tourist nights in the city to fund major events and promotions that could boost the city’s sluggish economy.

The lobbying from the commercial capital has come as headline indicators reveal the difficulty the Auckland economy is in. Stats NZ last week confirmed the city’s unemployment rate was higher than the national rate, at 6.1%. An economic update from Auckland Council for August said the city’s real GDP growth was 1.3% lower for the year ended March 2025 than the year prior, a greater decline than the rest of New Zealand, down 0.9%.

But a bed tax, or any other immediate moves, were shot down by Prime Minister Christopher Luxon again on Wednesday.

“I'm just saying to you, at this part of the economic cycle, what this country doesn't need is more bed taxes,” Luxon said, though no bed taxes are in effect in New Zealand.

“We're considering things all the time with a view of actually doing everything we can to respond to the circumstances that we've got.

“There's more work for us to do, for sure, and we are very open, very flexible, very agile, very nimble at being able to do things like investment boost, like fast-track legislation, like $6 billion worth of infrastructure investment.'

But Viv Beck, the head of CBD business association Heart of the City, said “with respect, I think he’s missing the point”.

“The reality is, Auckland has called for a bed tax. The Government doesn't like it. The point is, something has to happen.

“It's not helpful month after month after month, with people sitting around talking about the fact that we need major events, we need funding for major events, and there seems to be no sort of way through this.”

On Friday, Luxon and Government ministers took a trip on the City Rail Link, an underground train line beneath central Auckland due to open next year, which Luxon has said will improve Auckland’s economic fortunes.

But Beck said there had been a decade of “massive disruption” in the city to build this. The worst of the pandemic impacts also lingered and homelessness affected the city, she said.

If it was a no to a bed tax, “we need to at least be talking about other solutions”.

Another idea was returning GST earned on major events to Auckland, for further event promotion, she said.

“We were incredibly disappointed with the Government's decision on the America's Cup, I appreciate that they have hospitals, and education, and police to fund … but if they'd thought about it, they would have realised that they would have got the money back through GST.

“We desperately need something like this. We desperately need people to feel something positive, some injection of positivity.”

Mark Knoff-Thomas, chief executive of the Newmarket Business Association, said he would be “fast-tracking” a bed tax if he were in Government.

“Those big events are a lifesaver for the Auckland economy, and that they really get the oil of cash flowing through.”

He said the Government had done well on resolving crime issues in Auckland, but the city needed “a bit of a shot in the arm”, possibly through assistance with bringing in major events and promoting the city.

Despite the economic indicators, Knoff-Thomas said he thought Auckland had “turned a corner”.

“We're getting more positive activity, especially in the last sort of four to six weeks, which is encouraging.

“But the reality is, for a lot of Aucklanders, we've got a very expensive housing market ‒ or not so much now, but it was ‒ and they may be just overly leveraged, and it's really impacted their discretionary spend to do stuff. So that's been a big impact.”

Auckland Mayor Wayne Brown, who has championed the bed tax idea, was unavailable for comment on Wednesday.