The concept of a lodging tax--a tax levied on room rates in hotels and B&Bs--was first suggested in a public meeting back in September by Alderman John Friedman (Third Ward). The rationale for the tax was explained by Alderman Nick Haddad (First Ward) in a press release issued a few weeks ago by the Common Council Finance and Legal committees. (Friedman chairs the Legal Committee; Haddad chairs the Finance Committee.) "The Finance Committee has challenged itself to replace $1 million of the roughly $4 million property owners contribute to the City budget each year by broadening the tax base." A 4 percent lodging tax is one of the strategies for achieving that goal.
Haddad goes on to say: "We've been very sensitive to how such a tax might harm our lodging sector. But all of our research indicates--and we can't find anything to contradict it--that consumers expect to pay a lodging tax and so adding one where there is none has no effect on demand for rooms." Friedman added that the national average for a room tax is 14 percent. What is being proposed is a 4 percent tax, which combined with the existing 8 percent sales tax will be 12 percent--below the national average.
The proprietors of the established B&Bs, inns, and hotels in Hudson are not sanguine about the proposed lodging tax. The fear is that an additional 4 percent tax will drive visitors from the traditional lodging to the many apartments, houses, and guest rooms being marketed on AirBnB and VRBO and an "informal hotel" that Friedman says is "operating under the radar" where the lodging tax may not be charged.
To make the case for the lodging tax, which Haddad stresses "is financed by visitors not locals and in a manner the research shows doesn't affect demand," the Finance and Legal committees have scheduled a public hearing to take place on Thursday, February 12, beginning at 6 p.m., at City Hall. Friedman explains, "This hearing will be a forum for the Committees to hear from members of the community on the various issues surrounding a lodging tax and how it is applied, as well as the impact of short-term stay services on the lodging industry and neighborhoods."
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