Underpaid Lodging Taxes: How Local Governments Can Correct The Imbalance

Whether it’s called a tourist tax, room tax or a transient occupancy tax, the levy on lodging remains a key part of a city’s general fund. For decades municipalities have used it to deliver both essential services for residents, and to host special events that attract money-spending tourists. In the coming years, as cities face a future with higher expected costs for infrastructure, employee retirement programs and general services, the tax and its application need scrutiny. City managers and finance directors now operate in an environment where travelers have new lodging options. This puts pressure on the cities to review ordinances and ensure fair collection of the tax. They often do this with limited resources and systems not designed to process a broader application of the tax. This guide offers local government professionals considerations for managing lodging tax assessment and collection amidst new challenges. Lodging Tax History and Future First used in the mid-20th century, lodging taxes supported festivals, sporting events and other activities that entice visitors needing a short-term stay. As the role of government and costs have grown, cities have used the tax to fund other needs. And there’s no slowdown with that redistribution given the amount of money at stake: hotels will deliver a record-breaking $170 billion in gross bookings this year, according to consulting firm Deloitte. This falls in line with CBRE’s finding that 2018 marks the 9th consecutive year of rising occupancy with increases in average daily room rates (ADR) and revenue per available room … Continue reading Underpaid Lodging Taxes: How Local Governments Can Correct The Imbalance