The draft report released yesterday by the Productivity Commission, an independent Crown entity, recommends local authorities struggling with high tourism numbers be allowed to charge an accommodation levy.
Queenstown Lakes Mayor Jim Boult said he was not surprised by the finding, which indicated his council's visitor levy model was a good one.
"It's a logical way for local authorities, particularly those like us with a low residential population and high visitor throughput, to fund infrastructure."
The council was working closely with Government officials on legislation to enable Queenstown's 5% levy proposal, which last month gained 81% support in a referendum of the district's residents and ratepayers.
He dismissed criticism of the report by the Tourism Industry Aotearoa (TIA), saying it needed to "take a reality pill".
TIA chief executive Chris Roberts repeated a call for the Government to return 20% of the GST it collected from international visitors and give the funds to local government.
Mr Boult said the Government had made it clear a GST return was not an option.
"It's not supported and it doesn't make any sense.
"I think they've got to drop it."
Urban Development Minister Phil Twyford told the Otago Daily Times last month an announcement on Queenstown's visitor levy proposal would be made in the "coming months".
The commission's report says the council is one of several around the country experiencing pressure on its infrastructure from high tourist numbers.
"Government should legislate to enable councils in tourist centres to choose to implement an accommodation levy so those councils can recover the costs of providing local mixed-use services that tourists do not otherwise pay for."
Many local authorities perceived a "disconnect" between council costs from tourism, and central government benefits from tourism.
In 2017-18, international tourists generated $1.7billion in GST, and Deloitte had estimated that in the year to March last year, central government collected about $1billion in income tax, $353million in company tax and $264million in motor vehicle taxes that were attributable to international tourism.
The commission, an independent Crown entity,
is seeking submissions on its draft report before August 29, and will present its final report to the Government on November 30.
