Tuesday, April 5, 2011

The Level Playing Field?

We see that the Motel Association's complaint to Wellington City Council about the unfairness of a section of the region's accommodation providers paying residential rates instead of commercial rates is progressing with the council conducting a witch-hunt of over 1,900 properties. 

We would second-guess that this would be warmly welcomed by the majority of our motelier brethren, that would derive some smug satisfaction that those nasty "free-loading" accommodation businesses such as B and Bs and unit-titled apartments are being given some stick. We've always felt uncomfortable with this course of action and not surprisingly take a slightly different outlook.

Here's a Motella reality-check - Putting the blowtorch on nondescript, non-commercial accommodation operators will not increase custom for motels, it will not allow motels to increase tariff or reduce their rates burden.

If moteliers are honest with themselves, berating another sector will do nothing to change what's happening in their own back yard and will not address the real concern of an inequitable and increasing rating burden.

The "level playing field" argument that trade associations use in submissions to councils always seems to default to finger pointing at other sectors outside their sphere that supposedly are not pulling their weight. This seems to follow the woolly premise that it is acceptable for the business sector to pay an inequitable tax as long as others share the burden as well.

The "level playing field" argument is a simplistic populist response that may score points, but avoids striving to make a positive difference.

Along with advocating rationalisation and fiscal restraint, trade associations should have a clear objective to urge councils to eliminate business/private household rate differentials. This would address the anomaly of  businesses being charged higher rate differentials for no apparent logical reason, other than a perceived ability to pay.

Not surprisingly, Positively Wellington's David Perks seems to be supporting the level-playing field argument for businesses in central Wellington in order to widen the opportunity to extract further levies imposed by the city council for the benefit of his organisation.

We maintain that the targeted tourism levies are inefficient. The wider community should be given the opportunity to scrutinise the value of tourism marketing expenditure while bearing the full financial impost. This would ensure that any necessary tourism marketing project taken on by a Regional Tourism Organisation that is unable to be funded by private sector should be supported by rigorous economic analysis that clearly demonstrates net benefits for all ratepayers.  

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