JLF Research | Spotlights

An Occupancy Tax Increase? Haywood County already has a million dollars annually from existing tax

Sarah Curry
Apr. 28th, 2014
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Local and state officials from Haywood County have proposed a resolution that would increase the county’s occupancy tax by 50 percent.  Any increase in the tax rate should be put forward in a referendum, not a simple resolution by county commissioners.
Haywood County currently levies a room occupancy tax of 4 percent; the proposal would give county commissioners the ability to levy an additional 2 percent, bringing the total Haywood County room occupancy tax to 6 percent, the maximum allowed by state law.  Maximizing the tax rate at 6 percent would disadvantage Haywood compared to surrounding counties with lower occupancy tax rates.
The occupancy tax brought in $954,996 in revenue during the most recent fiscal year. The additional tax rate would increase that figure by a projected $541,537 for fiscal year 2014-15 bringing the total estimated annual occupancy tax revenue for the county to $1.5 million.  Nevertheless, the benefit of a tax increase would be very concentrated in one area, Maggie Valley, while the burden of the tax would be placed on the entire county’s lodging business sector.
Uniform occupancy tax guidelines require that at least two-thirds of the tax proceeds must be used to promote travel and tourism in the county, while the remainder may be used for tourism-related expenditures.  Taxation is justified only for necessary purposes of government. Tourism promotion is not a necessary function of government, since it is focused on benefiting one sector of the local economy. This function can best be served by the private sector.

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