What's going on with the tourist bed tax and why Peters and Luxon are clashing
New Zealand First leader Winston Peters says a proposed bed tax for tourists in Auckland and Queenstown is still government policy. That directly contradicts Prime Minister Chris Luxon, who has promised National will not bring in a bed tax if re-elected.
A bed tax is a charge added to a visitor's hotel or accommodation bill. The money would go toward local infrastructure like roads and facilities that tourists use but that councils currently pay for on their own.
Speaking to RNZ, Peters was clear: "a deal is a deal." He said a signed agreement with Auckland provides for the levies to be considered by the government in 2027, and that nothing has changed. He said the deal was between the coalition government and those cities, not between National and those cities — meaning National would be the one breaking the deal if it tried to walk away.
"If other parties want to campaign on reneging on the deal to even consider the levy, that is up to them," Peters said. He added that New Zealand First's view is that international tourists should be open to a bed levy that helps pay for key tourism infrastructure. RNZ
The comments come two days after Prime Minister Chris Luxon ruled out both a bank tax and an accommodation, or bed, tax as part of a new "no new taxes" election pledge made on Sunday 23 August 2026. 1News
National's ruling out of the bed tax disappointed the mayors of both Auckland and Queenstown. Auckland Mayor Wayne Brown said: "The deal is meaningless if the government cannot honour even a relatively modest commitment to explore an agreed proposal." A commitment to explore a bed tax was part of the Auckland Regional Deal. RNZ
The reason this is awkward is because of how coalition governments work. Under New Zealand's voting system, MMP, parties often need to join forces to form a government. They sign a coalition agreement that sets out what they will do together. But each party can also make its own separate promises during an election campaign. When a coalition commitment and a party's election promise clash, there is no simple answer about which one wins.
The broader context here is that councils, especially those with high tourism costs, have been pushing for a visitor levy for years. New Zealand councils called for tourist levies or a bed tax as a poll suggested public support for the measure in August 2024. RNZ Queenstown's mayor had previously outlined options for collecting a visitor levy to fund infrastructure directly to Peters when he was minister, including a bed tax model. RNZ A Queenstown referendum on a visitor levy was at one point expected to cost $70,000, separate from the government's $35 International Visitor Conservation and Tourism Levy. RNZ
The timing matters. Peters says the deal provides for the levies to be considered in 2027, which is after the next election. National's "no new taxes" pledge is an election promise. The two positions are not yet in direct conflict, because the commitment is to consider the idea, not to put it in place. But Peters is making clear he regards the consideration itself as non-negotiable, and that any party campaigning against even exploring the levy is campaigning against a signed agreement.
For National, the difficulty is that the bed tax question now sits alongside the wider fiscal stance Luxon announced. Having committed to no new taxes, ruling out the bed levy made sense for National. But it puts National at odds with its coalition partner, with two councils that have agreements in writing, and potentially with public sentiment that has polled in favour of tourist-contributed levies.
Peters, for his part, is drawing a line that costs him nothing now but keeps his options open later. He is not calling for the levy to be implemented tomorrow. He is insisting that the government honour its commitment to look at it in 2027. That is a position designed to survive the election cycle, regardless of who is in government after the vote.
