Tourism 'tax bully'

By Ken Brown | Jan 29, 2014

Woah Lynda.  You and I agree on most things political, but your position regarding the 2% tax is way off base.  Right out of the gate, you state that "small hotel owners are being forced to pay for a sports complex."  Your premise is completely flawed rendering the rest of your letter irrelevant unfortunately.  Small hotel owners collect and remit the tax.  It is the tourists and visitors who pay it.  To be so misleading is adopting the same tactics as the main stream media that we're so fed up with.  Further, whether or not it ends up being for a sports complex is completely unknown at this point although some have certainly claimed that would be a desirable use for the funds.  That is a different battle.

The games it seems everyone plays with numbers is exasperating.  It is a 2 cent increase.  It is also a 50% rate increase.  Both statements are correct. Which is more misleading?  You refer to the current tax going up $2 from $4 making it $6.  The only way these values can represent a valid example is if an average hotel room cost is $100.  What is the average hotel room cost in Haywood County?  While I don't actually know the answer to that, I'd venture to say $40 would be more accurate making your example hugely misleading to the tune of 275% if you prefer using percentages.

Do rental homes cost more?  Of course.  How much do they cost per room in order to compare them to average hotel costs per room?  On average, rental house per bedroom costs are measurably less than that of a hotel room.

Will this proposed increase chase away tourists?  Let's see.  An average room cost of $40 currently pays an occupancy tax of $1.60.  Assuming the new tax is enacted, that will increase by $.80.  Terrifying!  The 80 cents neither comes out of the hotel owners pockets nor will it chase anyone away.

Finally, bullies don't feel guilt.  Rather, they typically have feelings of hubris.

Comments (14)
Posted by: Scott Lilly | Jan 29, 2014 17:43

"That is a different battle." -- Not true.  There is a proposal on the table to increase taxes for no defined purpose.  Without a specific proposal on the table, one cannot consider if other spending ought to be prioritized and if other funding is required.  If a sporting complex is proposed, then someone should analyze this from two directions: (1) should the TDA use their existing $1,000,000/year for the sporting complex instead of the TDA paid staff doing other things like YouTube videos?  (2) If the YouTube videos are deemed more important than the sporting complex, then is the complex able to be perpetually funded with an additional $495,000/year?  (Don't forget the upkeep, insurance, paid staff to manage it, etc.)

 

Without that specific analysis you get something like Charlotte's Time Warner Arena (disaster for taxpayers paid for by hotel tax), Charlotte's NASCAR museum (disaster for taxpayers paid for by hotel tax), and Charlotte's Whitewater park (disaster for taxpayers).

 

As well, the hotel tax went up a few years ago.  Apparently some are now saying that previous tax increase wasn't "enough" as there is a desire for more now.  If that sporting complex (or whatever) would require an increase of 3%, then we'll be back at this again in the near future.

 

Finally, it is a tax and hotels and rentals have to pay it.  It's not a "tip bucket" left on the hotel counter that visitors drop in their loose change!  The referenced Class H felony isn't meant for the visitors that donate the extra funds for our town's benefit.  Here's how that's done:

Failing to register, file & pay the occupancy tax will result in penalties, which mirror NC sales & use tax as stated in General Statute 105-236, including:
•In case of failure to file any return on the date it is due, a penalty equal to 5% of the amount of tax will be assessed if the failure is for not more than one month, with additional 5% for each additional month, or fraction thereof, during which the failure continues, not exceeding 25% in the aggregate, or $5.00, whichever is greater.
•In the case of failure to pay any tax when due, a penalty equal to 10% of the tax will be assessed, except the penalty shall in no event be less than $5.00.
•Any person who willfully fails to pay the tax, make the return, keep records or supply required information shall be guilty of a Class 1 misdemeanor.
•Further, any person who willfully attempts to evade or defeat a tax or its payment, shall be guilty of a Class H felony.
•The County Finance Officer may direct that the financial records of accommodations be audited.



Posted by: Ken Brown | Jan 30, 2014 10:16

Nice to meet you Scott, though I did chuckle a bit at your comments.  You’re assessing the truth of a statement that can’t be evaluated by true or false.  “That is a different battle” was my way of saying I’m not going to address the issue of how the funds are spent with my post.  I mostly agree with your position that I would paraphrase as these funds should not be spent in such a way as to create an undue burden on Haywood County’s tax payers beyond the initial expenditure covered by the tax.  If the proposed legislation is written in such a way that does not preclude that, I would assert that therein lays the battle.

My point is more about how we weave a misleading tale in attempt to make a point as you have also done.  Let’s just suppose that a sports complex is indeed on the table.  You’re comparing that to a professional sports arena, a NASCAR museum and a Whitewater park.  Where is the credibility of the comparison?  Even given my general agreement with your position, those are ridiculous comparisons.

You go on to make a somewhat ludicrous statement about an occupancy tax is not paid via a tip bucket.  Surely you or anyone reading this is more rooted in reality than to give credence to that comment.  Using the $40 guesstimate for an average hotel room and a 6% occupancy tax, a lodging proprietor would collect $45.20 from their customer.  The bill would read $40 Room Rate, $2.80 Sales Tax, $2.40 Occupancy Tax.  The proprietor would send the $2.80 to the state and $2.40 to the county leaving them with, as coincidence would have it, $40.00; the exact amount of their room charge.  Consumption taxes are incremental to the cost and paid by the consumer, not deducted from the cost as you seem to imply.  If a proprietor runs their business by deducting the taxes owed from their room rate, they should probably seek some minimally basic business skills.  If the claim is made that $5.20 in taxes would chase away a prospective lodging customer, I maintain that too would be a disingenuous assertion.

Finally, regarding penalties for not remitting taxes, are those remedies not consistent with other tax fraud remedies?  If a proprietor collects funds from their customer for the purpose of sales & use taxes and does not remit them, have they not defrauded their customer?  If a proprietor collects funds on behalf of someone else (in this case the state and county) but does not remit them to the party for whom they were collected, should there not be a relatively stiff penalty to insure compliance?

Many of us conservatives subscribe to the notion of the Fair Tax model.  Sales & use taxes are a perfect example of just such a tax as they are consumption based.  If you’re asserting that it’s simply too much taxation, I’d suggest waging the battle where it makes the most sense; income tax, personal property tax, etc.  Tourism on the other hand is a critical industry for the county and merits having our tourists foot some of the bill for the tourism infrastructure they’re benefiting from.



Posted by: Scott Lilly | Jan 30, 2014 12:11

I do love an intelligent and respectful debate.  You make good points, Mr. Brown.

 

"...we weave a misleading tale in attempt to make a point as you have also done." - I am guilty as charged.

 

"Where is the credibility of the comparison?" -- Both are infrastructure projects intended to attract visitors funded by a tax from the hotels in the area.  Although someone might be able to find an infrastructure project that has "success" attributed to it, one does not come to mind that was funded with public money and did not create a long-term liability for taxpayers.

 

"Surely you or anyone reading this is more rooted in reality than to give credence to that comment." -- I have seen quotes from reputable people suggesting the tax is not anything locals have to pay..It's paid by tourists.  Yet if it's NOT paid, it's the hotel owner that gets in trouble.  That's a game played with words and the "tip bucket" was a contrast to illustrate reality.  It's a tax on revenue.  Revenue received by the hotel industry.  I would be interested to see a local hotel charging $1/night plus a mandatory $99/night service charge.  Do you think government would settle for a 6% tax on the $1/night rate?  I'll bet you the government would bring a lawsuit against a hotel for that kind of thing.  They aren't going to bring a lawsuit against the patrons paying $1/night and the tax on it.

 

"I maintain that too would be a disingenuous assertion." -- When you stay at a hotel in Waynesville, you will pay 16% in taxes in total.  The proposal is to increase that total tax to 18%.  So does an 18% tax in total become substantial to what a patron can afford?  You can always make a case that whatever is "affordable", a penny more can also be considered affordable.

 

"If you’re asserting that it’s simply too much taxation" -- I'm suggesting it is an unfair practice to use a majority of non-hotel owners to decide that the minority of hotel owners need to have their business taxed more.  This is taking from a minority to benefit a majority.  That's bad law.  (At least from a Republic perspective.  A pure Democratic perspective might disagree.)  Using that kind of logic, it would be possible for the entire town of Waynesville to vote to tax people living in Lake Junaleska extra to bring their infrastructure up to standard.  Of course those living in Lake Junaleska would all vote against it -- but they'd be in a minority and would lose.  Fair or not?  And then once Lake Junaleska infrastructure is brought up to standard and the tax persists because the "locals" don't have the votes to kill it.... still fair?

 

A final point, I find it very peculiar that nobody can justify the increased tax for any specific purpose.  Without that information, a complete debate cannot be held.  Is a sporting complex (or whatever) more important or less important than what the TDA does with the current funding it has?

 

I also have heartburn over local media not representing both sides of the issue.  Get into the TDA and see what it does and how it does it.  If they are a hard-working bunch that have lots of benefit that can be measured in real numbers, then they deserve to be heard.  If they would be more effective at capital projects that can be perpetually funded by the existing tax, let's hear it and consider allowing the existing tax be used for that purpose.  Instead, we hear this message: "We need more tax because everyone else does it and the people asking for the tax want it and will decide what to do with it later."  That sort of reminds me of that famous quote, "We have to pass the bill so you can find out what is in it".  I'm not a fan of that practice and I hope I can convince you not to be as well.



Posted by: Ken Brown | Jan 30, 2014 14:01

I’ll make a few additional comments then need to focus elsewhere as much as I too enjoy the debate.

 

There’s a little matter of scale when comparing a professional sports area to a neighborhood ball field.

 

No matter how it’s parsed, sales & occupancy taxes are, both by definition and by common sense, paid by the tourist who provides the occupancy tax revenue as required of them at the point of sale.  The hotel guest has fulfilled their obligation.  If taxes having been collected on the county’s behalf are not subsequently passed to the county, why would the customer be held to further account?  At that point, it is clearly the lodging proprietor (of which I am one BTW) whose responsibility it is to pass the proceeds along to the county.  To argue otherwise would be to say that our system of sales tax itself is flawed.  While you’re welcome to make that argument, I've not seen that path chosen by anyone.

 

As to definition, from a purely accounting perspective sales taxes collected by a business are not part of said business’s recognizable revenue.  An entity collecting tax on behalf of a taxing authority is acting as an agent for that authority.  As a result, sales revenues are recorded net of any sales tax.

 

As to a $1 room charge and, using my example, a $39 service charge, there’s a little matter of fair market value that simply would never hold up under audit.  It’d be an interesting exercise, but I’ll wait for someone else to tell me how it works out.



Posted by: Scott Lilly | Jan 30, 2014 14:24

"There’s a little matter of scale when comparing a professional sports area to a neighborhood ball field." -- Yes, sir.  Mecklenburg County increased their rate to 6% and since they have a HUGE population compared to Haywood County, their funding (and therefore projects) are proportionately larger.  However, the percentage of taxation is the same.

 

"No matter how it’s parsed, sales & occupancy taxes are, both by definition and by common sense, paid by the tourist who provides the occupancy tax revenue as required of them at the point of sale." -- Agreed.  The cost to the customer increases by the amount of the tax increase assuming the proprietor does not adjust his rate downward to compensate for the increase in cost to his customers to remain competitive across neighboring counties.

 

"I’ll wait for someone else to tell me how it works out." -- From a county that was home to someone named Popcorn Sutton, I'll suggest it is not out of the question to be attempted!

 

Good day, Mr. Brown.



Posted by: Charles Zimmerman | Feb 02, 2014 10:06

             There are a number of problems as I see it.

             First off there most certainly are many govt. funded projects that are very successful. Highways. Byways. Roads and transporatation in general. Water. Sewer. Entitlement programs. Etc, Etc.

             I'd guess the average motel rate in Haywood county is more like $75.00. Regardles a new tax is a new tax. Travelers. regardless of intent need to be informed if they are entering into a county that has instituted a new tax on them. After the fact at check-put ain't the time. I check my bills. "Boobied-half" is quite adept at scrutinizing every little charge. Having to pay a charge regardless of how little, that discriminates is not something we would support. Make no mistake any tax that singles out or otherwise "targets" a certain type of person, is by definition discriminatory.

           As to finding out at check-out that we must pay to support our own oppression, I believe the old expression applies:"Fool me once is on you". 'Won't get fooled again. Or something like that.

 

              C.Z.



Posted by: Charles Zimmerman | Feb 02, 2014 10:33

            Futhermore, what if you build it and they don't come? Who will be the next target to be taxed? The inn keeper perhaps? Eateries? Shop owners? In case you haven't noticed, and I bet you have, tourism is down. Motels in Maggie have closed(Rocky Waters was our favorite). It appears more and more people are just passing thru.  You could take advantage of the draw of the Casino, Dollywood, etc by establishing a transportation hub whereby folks could stay the night, get on a bus/tram be driven to where they care to go and returned back to Maggie's waiting comforts. Or you could put in a strip club and draw more bikers, which the way things are going, bikers will be Maggies main support group. Believe me bikers don't like surprise tolls at check-out time. I are one. So is "boobied-half".

         Either all are equal or none is.

 

           C.Z.



Posted by: Scott Lilly | Feb 02, 2014 15:51

Mr. Zimmerman, I can't quite stereotype you.  Just when I had you figured to be anti-Republican, you make this epiphany:  "any tax that singles out or otherwise "targets" a certain type of person, is by definition discriminatory."

 

Whoa.  That philosophy is what defines a Republican and what Democrats fight to discredit.  Democrats derive power and govern by "majority rules".  Their strategy is to market to a "majority" against the "minority".  That's a pure democracy.  In this specific instance, Democrats would ask the majority of non-hotel owners to impose a tax on a minority of non-hotel-owners.

 

A Republican would try to interpret the will of the majority in a way that does not discriminate.  If the will of the people is to buy a shiny, new _______, then Republicans would prefer to burden everyone equally to pay for it.

 

The most common divisive technique a Democrat will use is discrimination based on wealth.  Not too long ago you saw this blatantly showcased when President Obama started to refer to "Americans earning over $200,000/year", "families making over $250,000/year", and "the wealthiest X% of Americans".  That's a Democrat classically creating a minority that he hopes a majority would like to sign up with him to create a voting mob to exploit things like: paying a higher percentage of taxes, paying into subsidized healthcare, or other perks that a majority can take from a minority.

 

A strip club in Maggie Valley?!  Ha!  I needed a good laugh!  Can we name it "Mountain Mamas" or "The Peaks of Maggie Valley"?  :-)

 



Posted by: Scott Lilly | Feb 02, 2014 15:56

In this specific instance, Democrats would ask the majority of non-hotel owners to impose a tax on a minority of hotel-owners.



Posted by: Allen Alsbrooks | Feb 04, 2014 00:45

Mr. Brown.

I agree .80 will not chase tourists away. But, let me share with you what does chase them away since it is apparently the "elephant in the room" to everyone except those of us who are actually in the tourist business.

1. Restaurants which are closed at noon or 9PM.

2. Restaurants which are closed on Sundays.

3. Tourist information centers that keep "bankers hours." Why aren't they open until at least 9PM. The tourists we want to keep entertained in our county don't go to bed at 5PM.

4. Quoting the number one complaint from my guests: "What do you do here after 5PM?" The second is: "Why does everything close so early? We are bored."

5. Our own TDA would rather blow $ 900,000 (approx) each year on ineffective campaigns and in one case highly offensive video series than actually promote the assets we already have. Yet when you ask them to stand behind them their eyes roll back in their heads and they wet all over themselves. Oh wait, they do fall all over themselves when you mention "Folkmoot" which rarely does anything for Maggie Valley.

Show me one new project, just one, that will actually bring tourists and fill our facilities. I haven't seen one yet from the TDA in the 8 years I have been here.

Sports fields are not the answer. We need attractions for our guests to enjoy on a daily and nightly basis. Not just at tournament time. Oh, Gatlinburg is opening an 80 acre sports complex this spring. They are spending $20,000,000 on their Rocky Top Sports World facility. Now THAT is a serious investment into "family entertainment" and the cost is not being borne solely on the backs of their tourists.

As I have said before, I am against funding parks with tourist dollars when such endeavors would appropriately be funded with ad valorem taxes. But I am willing to change my mind if someone can show me how it will benefit us all. And that hasn't been done yet.



Posted by: Scott Lilly | Feb 04, 2014 08:53

Mr. Alsbrooks, we visited Waynesville from out of town over many  weekends before we bought our Waynesville home.  We stayed at the Oak Park Inn a few times -- walking distance of the "action" on Main Street, only to learn that if we walked downtown Saturday evening for dinner, "shopping" was not on the menu anywhere.  It must have been our 3rd trip to Waynesville before we bumped into a Mountain Street Dance -- only then we were sold!  Shops open, lots of people, and some real mountain culture that I thought had disappeared in the 25 years I had been gone.

 

I now schedule my trips downtown based on any events happening.  The Downtown Waynesville website is my guide.  And I bring out-of-town friends and family too.  It's that "rich" of an experience.  (So far, I don't have to pay any TDA taxes when I have out-of-town guests stay in my home like I do if I sometimes pay to put them up at the Waynesville Inn.  :-)  My neighbor is trying to get me to Canton to try their pickin-in-the-park events.  It seems to be the way small mountain towns accommodate the after-hours crowds.

 

It's a surprising business model for sure.  I imagine visitors make up most of the business of downtown shops on Friday evenings through Sunday afternoons.  I would expect those house to have the most visitors looking to become "patrons".  Heck, if anything I would think businesses would want to stay open long hours on the weekends even if that means closing a few days on the weekdays.  Even a coffee shop is closed Sunday mornings!  For an out-of-town weekend guest, that means 50% of the mornings of any weekend, the coffee shop is not an option.  (Everyone loves a cup of hot chocolate or coffee on the way to/from church!)  But hey, they stay in business so I'm sure they know what they're doing.  Chick-fil-A can do it and thrive so I guess it's a viable business model.

 

I'm afraid there is no shiny, new anything that will by itself measurably bump up tourism.  Check Gatlinburg's $20M investment in 5 years to see how their maintenance costs and other liabilities lose money on that venue year-after-year.  The best thing Haywood County has to offer is the culture of unspoiled simple living where time slows down.  I mean why would someone want to rent a cabin in a small town?  To "get away from it all" I suppose.  Could trying to change that by commercializing late nights and Sundays work against us?  On that matter I would trust the opinions most of the people who earn a living accommodating our guests.



Posted by: Allen Alsbrooks | Feb 04, 2014 13:54

If that "unspoiled simple living" concept drew vacationing families our doors would be bursting at the seams. There would be no need to increase tourist taxes to build sports complexes. What you describe works for Waynesville. It won't work in Maggie Valley...which I might add has historically collected over 50% of the "tourist tax."

Families don't flock to Myrtle Beach, Pigron Forge, Branson, and Asheville because they only offer "unspoiled simple living" they go for the full experience.

Funny, you say look at Rocky Top Sports World again in five years. Those of us who actually rent rooms do deal with this every day. My guests range from those wanting to "get away" to those who seek something to do when they can't hike the trails after dark.



Posted by: Scott Lilly | Feb 04, 2014 16:28

"What you describe works for Waynesville." -- My hat is off for those that manage Waynesville.  I am continually impressed at how well things are done.  (Measured in perceived effectiveness, efficiency, and quality.)

 

"My guests range from those wanting to "get away" to those who seek something to do when they can't hike the trails after dark."  - I yield to you, sir, as having more of a qualified opinion than mine.  It's all about knowing your customers. 

 

This time of year snow skiing is in season.  Why do people come to Cataloochee more than say Sugar Mountain or Wolf Laurel?  How does a town embrace that distinction to build on it?  I'm still trying to figure out if the town of Maggie Valley supports the new Ghost Town or not -- some of the stories I've read suggest that is a place some locals love to hate.  Bikers also seem to be getting a lot of attention lately in Maggie Valley.  I imagine many of them like to enjoy a beer.  Rumors are that some elements of the town discourage that kind of thing.  So it does seem that someone should decide how Maggie's "full experience" is defined and then at least market that identity to those that live and work there.  I'm reading that Maggie's town government has a new spirit of cooperation.  I'll bet (and hope) things improve as a result.

 

One thing is for sure, adding another 50% to the hotel tax is not a solution.  It could FUND a solution (or part of a solution).  But as of yet no solution has been proposed that the tax would fund.



Posted by: Charles Zimmerman | Feb 05, 2014 08:54

         In the light of equal protection, I don't support taxes being spent by any town for its promotion. Individual buisnesses should pay for their own advertising.

         Buisnesses were created to address the needs of the people coming to Maggie for whatever reason. Demand. Pure and simple. The old Ghost Town added to that demand greatly. It has lost its luster and most likely will not get it back as Dollywood, etc, has far greater appeal. Adding zip-lines will help to a limited degree. Having a trinitarrian-themed park that was originally old-west based and slighty bawdy is just glossing over the appeal. Besides unappealling to non-trinnitarrians. Why not ski-slopes?

         Barb and I spend 2 to 3 days a week on the Parkway. Mostly in Hindtooga(sp) area. We take the dirt roads to look at flowers, etc. Many people come to look at Elk which are hit and miss. Hopefully the picknkic area and trail will be open this year.

         I'd bet an Inn-owner that would advertise free(initially) van rides to see the Elk would have more butts in beds than their competitor.

         Eaglesnest would be a fine strip-club.

         Mud wrestling at the events center.

         Tractor/truck pulls. 

          Dancing contests featuring local girls. That was a huge draw at Cherokee.

           When times are tight, like say after a war-mongering conservative spend but not tax is in office, buisness in places like Maggie will succeed by appealing to the more basic interests to draw people in with the hope they will stay and spend some money AND come back. Repeatadly.

            Bikers alreddy have several establishments geared to them. An Inn-keeper could provide free taxi service to and from beer joints, etc.

          C.Z.



If you wish to comment, please login.