The tourism minister says his tax on international visitors will be in place by the end of next year.

The levy, of between $25 and $35 dollars is designed to help regions struggling to pay for urgently needed improvements to infrastructure, from toilet facilities to carparks.

Australians and people from most Pacific Islands will be exempt.

Tourism Holdings chief executive Grant Webster told Mike Hosking the money should be spent first in smaller districts, funding things small district councils can't afford.

"Carparks, local toilet infrastructure, places where visitors go where the residents rates can't pay for that type of infrastructure."

Webster says district councils like Waitomo struggle for fund infrastructure for tourists.

We actually run the water and sewerage for that area, which is ridiculous right, so let's fix those sort of things with this money."

There is one possible downside though, Webster says the levy could put a in dent in our record high visitor numbers, particularly as it coincides with a rise in fuel prices.

"New Zealand looks expensive at the moment to some destinations, it's another price adjustment, we'll have to watch it carefully."

The boss of our largest tourism operator says the money needs to be spent on tourism and nothing else.

Tourism Holdings chief executive Grant Webster told Mike Hosking the levy shouldn't become just another revenue-raiser.

"It's really key that this is hypothicated to that local infrastructure that we need and from a tourism industry perspective, they're really keen for us to have strong input."

LISTEN ABOVE AS GRANT WEBSTER SPEAKS TO MIKE HOSKING