Under cover of night, the state Legislature recently passed a transportation funding bill that included an inhospitable surprise.
Historically, states have not diverted tourism taxes to infrastructure beyond those that are supposedly tourism-related. Just one aspect of House Bill 170, a rental car tax thought to impact 50 percent of residents, was flipped unanalyzed and undisclosed to a hotel tax.
Told that that 85 percent of hotel stays in Georgia were out-of-state visitors, legislators moved from taxing clearly highway-related activity to taxing hotels. This $5 nightly tax, which takes effect July 1, caught lodging and tourism organizations by surprise.
It’s another example of taxing tourists who are “passing through” so resident taxpayers aren’t affected. So goes the story.
Even if they spend money statewide, tourists are easy targets. Even our locals recently extended a SPLOST tax — sold to the tune that tourists foot the bill for these projects. But those residing or doing business here pay as well, and so continues the dangerous manipulation for tax dollars.
The actual impact on Georgia tourism (13th in the U.S. in 2012) will be worse, according to a study for Georgia Association of Convention and Visitor Bureaus. Locals indeed account for 20 percent of Atlanta’s 94,000 hotel rooms, but the other 83,000 rooms in Georgia have as high as 75 to 80 percent in-state travelers. Savannah and the convention center in Atlanta will feel the effects.
The York House, Georgia’s oldest inn, hasn’t passed 119 years being inhospitable. Travelers are asked to pay a 7 percent state sales tax plus a 5 percent county lodging tax. This new tax amounts to 15.7 percent per night, $21.20. Our guests — 85 percent are Georgians — face a tax rate above Hawaii’s.
A ritzy Atlanta room at $279 will carry a tax of more than $49 (17.8 percent). There goes dinner out! Not only the wealthy will pay; a $60 motel room nearby features an eye-popping 20.3 percent tax. If you don’t think the tax affects these guests, think again.
PKF Hospitality Research said the fees will discourage hotel occupancy, and the state may miss hitting its $200 million mark. “History reveals that consumers do react negatively to an increase in price, and some level of demand is likely to be lost,” wrote Mark Woodworth of PKF. Metro Atlanta’s and Savannah’s aggregated 68 percent occupancy could fall to 65.2 percent if more than about 1 million rooms go unsold because of price sensitivity, he said.
Projected revenue is destined to fall short of goals, and the impact on tourism will likely reduce driving miles and occupancy, thereby nullifying future rosy projections. Ripples are incalculable as tourists move their dollars, and as convention organizers’ decisions today affect Georgia 10 years from now.
The wonders of Georgia never cease to amaze, and will be even more amazing to any Georgia travelers in July.
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