No new taxes: National scraps bed tax and bank tax plans
Prime Minister Christopher Luxon has ruled out a bed tax and a bank tax, promising "no new taxes" if National is re-elected in the November 2026 general election. The announcement on 23 August 2026 scraps two revenue options the government had itself floated. It also reverses a formal promise made under the Auckland Regional Deal.
A fortnight earlier, Luxon had spoken publicly about three possible new taxes under National: a bed tax, a bank tax, and a fuel excise increase (a tax on petrol and diesel). The bank tax had already been ruled out before the bed tax was scrapped. NZ Herald
Mayors who had been counting on the bed tax — a nightly charge on visitor stays to help fund local infrastructure — have reacted strongly. Auckland mayor Wayne Brown said he was "deeply disappointed" that National ruled out the bed tax after formally agreeing to it months earlier, and accused the party of "walking away" from its commitment to the Auckland Regional Deal. Stuff
The Auckland Regional Deal, signed in April 2025, included a government commitment to consider the accommodation levy in 2027. Brown argued the bed-night levy was a user charge rather than a general tax, and would result in no additional rates or taxes on Aucklanders. He said he looked forward to discussing the issue with Infrastructure Minister Chris Bishop and Local Government Minister Simon Watts at the next quarterly review in September. RNZ
Queenstown Lakes District mayor John Glover called the ruling-out a "complete u-turn" on policy. The Queenstown regional growth deal had been on the verge of being signed about a week and a half earlier but had to be rescheduled because National's crisis talks fell on the same day. Rotorua mayor Tania Tapsell said she was "surprised" by the bed tax announcement, given it formed part of the Auckland Regional Deal. RNZ
The question of whether National would rule out new taxes at the next election was put directly to Luxon at a post-Cabinet press conference on 3 November 2025, when a journalist asked whether the government needs a bed tax and whether the National Party could rule out running on any new taxes. Beehive
National's broader tax approach has focused on encouraging investment rather than adding new levies. Budget 2025 introduced Investment Boost, a tax incentive allowing businesses to immediately deduct 20% on qualifying investment in capital assets, designed to encourage investment, grow the economy, and lift wages. National Party
The broader context is that the reversal on the bed tax could strain the government's relationship with councils. These councils have built long-term funding plans around regional deals. The Auckland Regional Deal, signed in April 2025, was meant to provide a framework for central and local government to work together on infrastructure and growth, with the accommodation levy flagged for consideration in 2027. Brown's argument that the levy is a user charge rather than a general tax reflects a longstanding debate in local government finance: whether charges on visitors count as taxation, or are better seen as pricing for infrastructure used by people who do not live in the area.
The rescheduling of the Queenstown deal because of National's crisis talks adds another layer. Councils that have already put off signing growth deals are now being told a revenue tool they expected to use is no longer available. For mayors like Brown and Glover, who say tourism-heavy areas carry heavy infrastructure costs without enough ways to pay for them, the "no new taxes" pledge leaves few options: raising rates, seeking central government grants, or taking on debt.
In practical terms, the pledge also limits National's fiscal position heading into the November election. Having ruled out a bed tax, a bank tax, and committed to the Investment Boost deduction, the party has narrowed its options for raising revenue while keeping a tax incentive that reduces what it collects. The September quarterly review between Brown, Bishop and Watts will be the first test of whether the pledge becomes firm policy or a starting point for negotiation.
