Many South Sound hotel and motel operators continue to question so-called room tax rates and how revenue from the taxes they’re required to collect isbeing spent.
The purpose of the tax is to generate funds that can be used to attract tourists. If the city in which a hotel if located doesn’t charge a room tax, the county is free to impose the same one that’s charged at hotels and motels in its unincorporated areas.
Olympia funded a variety of events and organizations with hotel taxes in 1999. The biggest recipient was the Washington Center for the Performing Arts, followed by the visitors and convention center. Third was Bigelow House, an historic attraction. Olympia’s sesquicentennial celebration was fourth. Other activities receiving assistance were the farmers market, Olympia Symphony Orchestra, a Shakespeare festival, the art walk and a parade called Procession of the Species.
Puyallup, for instance, collects a 7 percent room tax. Some of the money funds a City float, which represents Puyallup in parades around the Northwest, including the Daffodil Parade. It even makes the trip to San Diego for the Holiday Bowl Parade.
“It is the only float from the Northwest that I know of that is invited to the Holiday Bowl every year,” boasts Dean Driver, chief financial officer for the City of Puyallup.
Asked if he believes the Puyallup Motel benefits from the float, owner Young Park replies: “What do you think?”
He’s more enthusiastic that funds also go to the Meeker Mansion, the Daffodil Parade, local visitor and convention efforts and the Tacoma-Pierce County Convention and Visitors Bureau. In addition, public art exhibits scattered around downtown are funded with revenue from the tax.
“That draws a lot of tourists to town,” Driver says of the art.
Yet Park wonders why hotel guests are taxed at a higher rate than those who patronize other businesses.
“That does not make sense,” he says.
He says guests expect a regular sales tax of around 8 percent on their bill. “When I say 13.4 percent (the sales tax plus the room tax), they say, ‘Wow’.”
“Guests tend to be a little shocked when they see 13.4 percent on their bill,” agrees Mary Hursh, front office manager of the Comfort Inn in Fife, whose sales and room taxes add up the same total as Puyallup’s.
Hursh feels the tax is worthwhile. Fife is trying to establish an identity and provide residents with events and facilities that improve the quality of life, she says.
“The business community needs to support that,” she declares. “People should take pride in where they live and work.”
In Fife, hotel taxes fund the City’s Daffodil float and softball fields at a City park. The Fife Visitor Information Center receives money to pay for advertising in regional publications. The Fife International Festival, Tacoma-Pierce County CVB, the Daffodil Festival and a sports commission also receive money.
Tacoma also collects a 7 percent room tax. A 2 percent tax instituted in 1970 goes into a stadium and convention center fund. Another 2 percent is earmarked for a visitor and convention promotion sub-fund, and 3 percent goes to a tourism and convention sub fund.
Sumner uses hotel taxes to sponsor a booth at the Western Washington Fair. They also support a tourism development fund and concerts in the park, Ryan House and banners with a train motif to help promote the Sound Transit train station.
Visitors to hostelries with at least 25 units in the Gig Harbor city limits are subject to a 7 percent hotel-motel tax in addition to regular sales tax. Those with fewer than 25 units pay 4 percent. City Finance Director Dave Rodenbach says the tax revenue has jumped sharply in the last three years.
Gig Harbor collected $16,000 in hotel-motel tax revenue in 1997. The revenue jumped to $45,000 in 1998 and shot to $124,000 last year.
Rodenbach says all the hotel-motel tax revenues by law must be used for tourism-related activities. The money tourists bring into the community is, in turn, used to attract more tourists.
By John Larson, Business Examiner staff