Tourism industry rejects hotel tax proposal to fund light rail

THE state’s tourism industry says any plan to fund the light rail development through a visitor/hotel tax would sound the death knell for the city’s ability to attract visitors.

An artist’s impression of the proposed light rail line through Glenorchy. Picture: GHD

THE state’s tourism industry says any plan to fund or maintain a proposed Hobart northern suburbs rail corridor development through a visitor/hotel tax would sound the death knell for the city’s ability to attract visitors.

The Mercury recently revealed the $200 million blueprint to transform urban development along Hobart’s northern suburbs rail corridor, which includes new public spaces, modern housing and shopping, and a restaurant strip all linked by a light rail system.

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New “key precincts” for more intensive urban, commercial and community development in the two cities were also proposed in the study by consultants GHD.

The study suggested one option to part-fund the project could be through a visitor/hotel tax.

“Hotel occupancy taxes have been used as a value capture revenue source to support the development of infrastructure projects predominantly in larger cities in North America which are subject to significant amounts of tourism,” the study said.

It said it could be imposed through a direct tax or additional rates.

But it did specify that it needed to be taken into account whether this would have a “material impact upon visitors’ willingness to come to Hobart”.

“Such a tax may be seen as politically beneficial given that it does not impose directly on the pocket of its constituents,” the report stated.

“Although it is likely that such a tax would invariably impose a marginal economic cost on an important local industry.”

Hobart Lord Mayor Sue Hickey said she did not mind the concept, but needed to find out more about its impacts.

“I’m not averse to it, it just depends on the percentage of tax that is used,” Alderman Hickey said.

“I would like a lot more detail around it before I decide whether it’s a good idea or a bad one.”

Visitor/hotel taxes are common in Europe, with the money raised going to the city.

But Tourism Industry Council Tasmania chief executive Luke Martin said it would be a disaster for the industry in Hobart.

“Visitor taxes don’t work,” he said. “I think the light rail and the urban development is a great idea but it shouldn’t be funded by killing our tourism industry.”

A State Government spokesman said they had no intention of imposing such a tax.

“The Hodgman Government believes in lower taxes and we will not be imposing any sort of tourist tax, because all that would do is turn potential visitors away to other destinations,” he said.

A Labor spokesman said it was not something it would support.