ACT is proposing to give councils $1 for every commercial guest night recorded in their area, under a new tourism funding policy it said would relieve pressure on ratepayers without introducing a bed tax.

ACT Leader David Seymour announced the Local Tourism Dividend on Friday, saying councils were often left paying for infrastructure and services required by visitors while much of the tax generated by tourism went to central government.

“Councils will receive $1 for every guest night in their area, funded from the GST and visitor levies tourists already pay,” Seymour said.

Under the policy, every territorial authority would receive an automatic annual payment based on the most recent 12 months of domestic and international commercial guest nights recorded through the Accommodation Data Programme.

Councils would not have to apply for the funding, provide matching contributions or negotiate with central government.

Using 2026 guest-night numbers, ACT estimated the scheme would distribute about $40.6 million a year to councils nationwide, including about $8.2 million to Auckland, $4.9 million to Queenstown and $2 million to Rotorua.

The initial payment would be set at $1 per commercial guest night, although ACT said that amount could increase in future years if government revenue allowed.

Seymour said tourism brought significant economic benefits but also placed pressure on local roads, wastewater systems, public toilets, rubbish collection, freedom camping facilities and other council infrastructure.

“New Zealand is a top tourist destination but that success causes strains on local infrastructure. Ratepayers are too often left to pick up the bill,” he said.

“ACT’s Local Tourism Dividend gives councils the funding to keep pace, easing pressure on wastewater, public toilets, rubbish collection, freedom-camping facilities, and other services.”

Councils would have discretion over how the money was spent within specified areas affected by visitor demand.

The funding could go towards local roads, parking and visitor transport facilities, water and wastewater infrastructure, public toilets, litter control, waste collection, freedom camping facilities, council-owned public spaces and events infrastructure.

ACT said councils could also use the dividend to replace rates funding already being spent on eligible services, meaning councils could either increase investment in tourism-related infrastructure or reduce pressure on ratepayers.

The party is positioning the policy as an alternative to proposals for accommodation or bed taxes.

Seymour said a bed tax would increase costs for visitors and impose another administrative burden on hotels, motels, holiday parks and other accommodation providers.

“No compliance burden: accommodation providers do not have to calculate, collect, file and pay a new tax,” he said.

Instead, the annual payment would be calculated using existing guest-night data.

ACT said the Local Tourism Dividend would be funded through the existing tourism appropriation and could begin as early as July 1 next year if included in the next Budget.

Seymour said introducing a new bed tax would take longer because legislation and a new collection system would be required.

“It will not raise the cost of staying in New Zealand, discouraging people from visiting the country, or reduce the revenue of accommodation providers,” he said.

The policy builds on ACT’s approach to sharing growth-related revenue with local government, including a policy secured this term to share revenue with councils enabling additional housing.

Seymour said the same principle should apply to tourism.

“The Local Tourism Dividend gives visitors a fairer deal without a new tax. If a council attracts more visitors, it gets more funding – simple, fair, and fast.”