New Castle News

August 2, 2013

Bill would hike hotel tax

John Finnerty

CNHI — A proposed bill introduced in the state House would allow nine counties — including Cambria and Mercer — to hike the county hotel tax by 60 percent.

Representatives of the trade association for visitors bureaus said it would like to see all counties given the chance to raise the hotel tax.

Currently in Pennsylvania, the state collects 5 percent on the cost of a hotel room and most counties collect 3 percent.

A separate piece of legislation in the Senate would allow counties with between 149,000 and 209,999 people, to raise the hotel tax. The Senate bill provides for the same level of tax increase as the House bill.

Industry experts and lawmakers at a public hearing on House Bill 1486 were more hung up on the question of how many counties ought to be able to increase the hotel tax and how they might use the money than they were about whether a tax increase is appropriate.

Joe Massaro, chairman of the board of the Pennsylvania Travel and Tourism Association, said the group would support legislation to increase the county hotel tax to as much as 7 percent, more than double the amount most counties now collect. Massaro is general manager of the Harrisburg Hilton.

The Pennsylvania Restaurant and Lodging Association also supports a tax hike, as long as the money is reserved for tourism promotion, a spokeswoman said. The organization supports raising the tax to as much as 6 percent, she said.

Increasing the county hotel tax from 3 to 5 percent would increase the tax on a one-night stay in a $150 a night hotel room from $4.50 to $7.50. Increasing the tax to 7 percent would put it at $10.50. All of that is on top of the $7.50 in tax from the 5 percent the state collects.

The dollars really add for local visitor bureaus though.

VisitMercerCountyPA got about $650,000 in hotel tax dollars last year, Peggy Mazyck, executive director, said. If the state were to allow counties to increase the hotel tax to 7 percent, it could mean another $890,000 for tourism promotion in the county.

The Senate bill includes provisions to use some of the additional money for economic development, historic preservation and the arts. The Senate bill also would allow counties to use some of the new tax dollars for grants to help pay for police.

Massaro said the travel and tourism association believes any additional hotel tax should be used exclusively for promoting tourism in Pennsylvania. Raising taxes and then using the money for things un-related to tourism would be “self-defeating,” Massaro said. Raising taxes would create a disincentive for travelers to visit that would have to be overcome, he said.

State Rep. Mark Longietti, D-Mercer County, said hotel tax dollars are being used to help pay for Water Fire Sharon, a festival this weekend along the Shenango River. Longietti, a member of the House Tourism Committee, asked tourism industry officials at the hearing if they objected to that use.

Massaro said Mercer County’s use of the hotel tax dollars seemed appropriate, noting industry officials are more concerned about ventures where tourism promotion money is spent on upkeep for convention centers and visitors centers.

Mazyck said VisitMercerCountyPA is spending about $30,000 of hotel tax revenue on the festival. That spending is through a special grant program that the visitors bureau uses to help boost local attractions to bring in new visitors and convince tourists to return.

Additional dollars also likely would be used to help local tourism businesses pay for advertising, Mazyck said, and to improve the use of signs along Interstate 80 to get people off the interstate.