Tourism Tax Incentives

Below is a message from Steve Traylor, a member of NACo’s legislative staff, regarding tourism tax incentives and tax breaks.  There have been efforts by online travel companies to be exempt from having to collect state and local taxes – thus preempting your local taxing authority.  If your county has adopted a local hotel/motel sales tax, it is important for you to contact Senator Grassley regarding legislation being considered by the Senate Finance Committee.  Please share with Senator Grassley how your local hotel/motel sales tax is being used.  When submitting that information to Senator Grassley, please also provide a copy to Steve Traylor at NACo, straylor@naco.org.  You can call Senator Grassley’s office at 202.224.3744 or fax information to him at 202.224.6020. You can also click here to fill out the online contact form.  Your assistance on this issue is appreciated.

Published reports indicate that the Senate Finance Committee may be considering “tourism tax incentives” and “tax breaks to boost tourism” as part of a proposed jobs bill.  We believe these tax breaks and incentives may be nothing more than further efforts by the online travel companies (such as Expedia and Travelocity) to preempt state and local taxing authority and to obtain preferential tax treatment.   

Local governments use hotel occupancy taxes in various ways.  In some localities, the revenues are funneled into the general fund to help provide badly needed community services to our residents.  Some localities use the revenues to promote tourism.  And some municipalities use these funds to pay off voter-approved bond obligations used to finance convention centers, sports arenas, and other public buildings.  Indeed, the impact such preemption would have on existing bond issues that rely on these tax revenues for repayment would be devastating to local budgets and could adversely affect local government credit ratings.  Preempting local taxing authority over the OTCs will NOT create jobs.  In fact, it may very well result in the loss of jobs because of a decrease in local revenues, necessitating cuts in staff and services.  

We need your members to contact their senators today and urge them to reject any legislative proposals that would preempt or limit local taxing authority over online travel companies.  We especially need those with members on the Senate Finance Committee to take action: Montana, West Virginia, North Dakota, New Mexico, Massachusetts, Arkansas, Oregon, New York, Michigan, Washington, Florida, New Jersey, Delaware, Iowa, Utah, Maine, Arizona, Kentucky, Idaho, Kansas, Nevada, Wyoming, and Texas.     

If you have any questions or need any additional information, please do not hesitate to contact Stephen Traylor, Associate Legislative Director, National Association of Counties (NACo) directly at 202.942.4254 or straylor@naco.org.