Letter writer: Hotel room tax increase means taxpayers foot bill for tourists

Graphic by Lori Deaton

We all pay taxes on the gasoline we put in our cars. In North Carolina, about 37 cents per gallon is collected from fuel sales. This tax amounts to a user fee. The proceeds are used to build and maintain roads and bridges statewide.

Imagine, however, a different situation. Suppose gas tax proceeds were given to automobile manufacturers. The funds could be used to advertise automobiles, meaning every other commercial on television could be a car ad, and a billboard advertising the 2015 models would show up every 100 yards on the highway. Maintenance and construction of the highways, of course, would be the responsibility of taxpayers, whether they drive cars or not.

Crazy, I know. But that’s how Asheville’s hotel occupancy tax works.

Tourists who see that 8 to 10 bucks tacked onto their bill at a local hotel may think that money’s going to the city of Asheville, helping local taxpayers with the costs of tourism: solid waste, law enforcement, maintenance, housing assistance for tourism’s notoriously badly paid locals. But the city doesn’t get a whiff of that money. It goes to the Buncombe County Tourism Development Authority (BCTDA), a well-connected group of hospitality moguls who’ve gotten our legislature to give them authority to levy taxes.

The BCTDA recently got their 50 percent increase in the occupancy tax, which means they now have $10 million a year to spend on projects that stimulate more room nights, more solid waste, more police and fire calls, more expense for local taxpayers. And the BCTDA’s clueless about buying local: The keystone advertising contract went to a New Orleans firm.

Our legislative delegation in Raleigh rolled over on this, and shame on them.

Other city governments collect taxes from tourists to help defray the costs of hosting people who throw things in the trash, wreck cars and more, but not Asheville. Thanks, BCTDA, for nothing.

— Andrew Dahm
Asheville

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8 thoughts on “Letter writer: Hotel room tax increase means taxpayers foot bill for tourists

  1. Henry

    I wonder if all of the local businesses that have received investment grants from the TDA to help grow and expand their businesses would feel differently than the author of this letter?

    • NFB

      It’s not an either/or thing. There is simply no reason a portion of the room tax should not go to help pay for the services tourists use while they are here. Having the state collect a tax that is then given to an unelected board representing a single industry and that is not accountable to the public is wrong.

      For years, whenever it was suggested that a penny or two be added to the tax so that tourists could help pay for the services they use while here the Chamber of Commerce and hotel owners opposed it saying that raising the cost of hotel rooms would mean people whole go elsewhere. But now that they get to eat more from the trough they are happy to raise the cost of a hotel room and suddenly this rise in the cost of one won’t keep people from coming here.

      The system suffers from self gratification and too much inbreeding and I agree with the letter writer that the Buncombe County delegation to Raleigh seriously dropped the ball in this matter.

      • Henry

        “Wrong” is subjective.

        There’s also a big difference between the Asheville of 2005 and the Asheville of 2015, and that factors into how much people are willing to pay to stay here.

        With the 100+ restaurants in the 28801 zip code, you have to have a healthy tourist base to keep those open, or else they’re all not going to make it – and then what about those jobs? There’s now way the local population base alone keeps the majority of those open; certainly not at the levels they are currently funded on.

        This also assumes a negative economic effect from tourists. As Rep. Brian Turner (D) asked, are tourists leaving us worse or better off?

        For example – if a couple comes here, stays at the Biltmore House Hotel at $400 a night, eats at Curate, Rhubarb, and the Corner Kitchen, visits three breweries and buys art from a gallery, not only have those people put over $1,000 directly into local businesses, but have also paid $70 into sales tax locally. Sure, the 70 isn’t a gaudy number, but this tourist also hasn’t availed themselves off too many City Services, if any.

        • bsummers

          Keep in mind that the City only receives about $1 out of 9 of that sales tax generated in Asheville. Businesses send it to Raleigh, and after Raleigh takes their cut, it gets sent back to Buncombe County, and they have historically chosen the re-distribution formula that sends the least amount back to Asheville as possible. $8 is even less gaudy than 70, isn’t it? At least, that’s what it was in 2010. Here’s the chart showing how Asheville is supporting the County and all the other municipalities, but gets a pitiful share of what they raised in return:

          https://dl.dropboxusercontent.com/u/108366839/Buncombe%20Retail%20Tax%2001-10%20chart.pdf

          That’s only valid up to 2010. One of the first things the GOP did when they took over is order the Dept. of Revenue to stop breaking out those numbers so the cities know how bad they’re getting screwed. So they no longer provide that detailed distribution information.

          It’s probably worse now, and is likely to get worse as the NCGA re-jiggers the distribution formula to send more of the sales tax raised in economically robust counties to poorer, rural counties.

          Raising the hotel tax and handing it all back to the very industry that raised it, simply so that they can attract more business for themselves, irrespective of the infrastructure needs of the city they operate in, is just wrong.

          • Jim

            That applies to the RAD and breweries as well. No problem with getting the ball rolling with some investment but subsidizing it to infinity while they rake in millions and my property taxes continue to rise FOR ABSOLUTELY NOTHING IN RETURN is appalling.

  2. Grant Millin

    Asheville is a hub of commerce and culture for the region so I have no problem seeing insights from outside Asheville.I’m running for Asheville city council. If you know folks in Asheville let them know I have solutions like an Asheville Tourism Carbon Audit to start dialing in on some of the otherwise unarticulated risks around more hotels.

    We are in a hotel glut and instead of adjusting strategy like responsible business and community leaders do, I keep hearing the solution is more, more, more escalation of commitment in the current direction. That direction is more advertising to draw in more tourists using a tax versus a bottom line member-funded tourism advocacy organization. Taxes go to the public good, not industry marketing for an industry that is now more than healthy on its own… at least in terms of profits.

    The way there will be a big drop in tourists is when there’s another market crash and when the tourism industry is revealed to have not taken up concepts like sustainable tourism in the main. That’s about irresponsible markets and members of city council can work with other municipalities across the state and nation to push for smarter, more sustainable economics that benefit us all and even our necessary environmental requirements.

    I have a solution that includes passenger rail to Asheville and has a sustainable tourism element. I look forward to sharing this solution soon.

    https://www.facebook.com/millinavlcouncil

    https://www.facebook.com/sustainavlwnc

  3. Sharon Tabor

    Tourism taxes promote Asheville which brings in tourists which in turn creates jobs which in turn creates more occupational tax which in turn provides money for infrastructure. Remove the tax to support and promote Asheville, therefore diminishing the job base, therefore diminishing the occupational tax which in turn will raise property taxes. So, would you prefer an increased tax that is only paid if someone stays in a hotel, or increased occupational and property taxes to the residents? I’d vote for the transient tax any day.

    • Grant Millin

      You’re leaving out the insanely weak ‘intergovernmental’ (state and Federal) expenditures COA receives. And no, potential additional Federal expenditures wouldn’t have to come from low and middle income folks. I agree issues like property and sales taxes can be reviewed.

      Let’s face facts: the majority is over Reaganomics. Let’s see some challenger candidates at all levels willing to drop what doesn’t work from the past and build a much greater future. A more sustainable economy and larger civilization isn’t just about taxes, but that’s a public place to shift to a higher gear.

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