Friday, March 24, 2017

What the Lodging Tax Isn't

Gossips has been reporting about Hudson's lodging tax since September 2014, when it was first proposed by Alderman John Friedman (Third Ward), so doing more than simply noting it had, after all this time, finally been enacted in Tuesday night seemed unnecessary. Perhaps I was wrong. 

Today, the Register-Star has story about the lodging tax with the lede: "Hotel and Airbnb owners will now pay a portion of their profits to city tax": "Hotels, Airbnbs to pay portion of profits to city tax coffers." No, that's wrong. Like sales tax, the lodging tax is a local tax added to the daily rate charged at hotels, inns, and B&Bs--including rooms rented through Airbnb. It does not come out of the profits of the owners of these hostelries any more than sales tax comes out of the profits of the owners of retail stores and service businesses. The lodging tax is paid by visitors to Hudson who stay in the city's hotels, inns, B&Bs, and Airbnbs.

1 comment:

  1. Thanks, Carole, for the clarification. When Nick Haddad and I first began working on the lodging tax it was specifically designed as an adjunct to the existing sales tax and so paid by the consumer, not the provider. And perhaps equally if not more importantly, we were very concerned with how imposition of a lodging tax might affect elasticity of demand (in other words, would the tax drive down demand for lodging?). We examined every economic and econometric study we could find and they all came to the same conclusion: there is no affect on demand due to a lodging tax. The City stands to gain somewhere in the neighborhood of $800k in revenue generated 100% from visitors to the city over the next 5 years. This will, hopefully, take some of the pressure off property owners and their tenants.