Controversial John Locke Foundation report to be discussed Monday

By Vicki Hyatt | May 15, 2014

A report by the John Locke Foundation that has concluded Haywood County would place its local hospitality businesses at a competitive disadvantage if the county’s occupancy tax rate increases will be discussed at a luncheon meeting Monday.

The report questions Haywood’s need for additional tax revenue, along with the process county officials would use to raise the tax rate.

“Those pushing for the tax increase argue that more money collected through the occupancy tax means more money for promoting and marketing the county,” said report author Sarah Curry, JLF director of fiscal policy studies. “In reality, it just means county government would take more money away from businesses and consumers to be spent in a way government officials have decided is best for them.”

Ken Stahl, chairman of the county’s tourism development authority, (the board that decides how the industry-generated funds are distributed) said there are many errors in the report.

“I think they had a preconceived notion about how this was going to turn out,” he said, “because there are numerous things that are just plain wrong.”

The agency is preparing a point-by-point rebuttal.

Haywood County now assesses a 4 percent occupancy tax rate for hotel rooms and other overnight  rental accommodations. Proposed legislation would allow Haywood to raise that rate to the state maximum of 6 percent.

The report states none of Haywood’s neighboring counties charges an occupancy rate that high, another point TDA officials dispute. Stahl notes neighboring Jackson County has the authority to raise the rate to 6 percent and said several neighboring counties have both a county and city tax, which brings the rate travellers pay to 6 percent.

Since a majority of hotel reservations are made online, customers can compare rates quickly for hotels in Haywood and surrounding counties, Curry said in her report. “A higher rate might initially boost revenue collections, but over time the tax increase can be expected to reduce local businesses’ revenues.”

Stahl said of all the years he’s spent in the motel industry, never has the occupancy tax rate been a factor.

While Curry’s report stresses the added tax will create more promotion funds she contends aren’t needed, the report fails to acknowledge that the added tax has been earmarked for capital projects that will give tourists more to do in the county.

“Our industry has been struggling and is under a lot of pressure from Cherokee and Buncombe, which seems to be doing very well,” Stahl said, noting both regions have invested in the type of projects that could be built in Haywood if funding was available.

If lawmakers approve the proposed tax increase, Haywood County commissioners could adopt the higher tax rate by resolution. Curry’s report suggests the county should go a step beyond what’s required in state law and hold a countywide referendum for the new rate to be effective.

“Taxation is justified only to raise money for necessary purposes of government,” Curry’s report states, noting that tourism promotion does not meet that standard.

The meeting will take place from 11:30 to 12:30 p.m. Monday, May 19, at Bocelli’s Italian Eatery,  319 N. Haywood St., Waynesville. The cost is $6.95. All are invited. The guest speaker will be Becki Gray Vice, president of outreach, and Kory Swanson, executive vice president, who make up the “Public Policy Think Tank.”