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Pennsylvania Hotel Room Excise Taxes

Pennsylvania Hotel Room Excise Taxes. Draft Presentation. Introduction. Disclaimer Focus on County Room Taxes – not the Pennsylvania Hotel (State) Occupancy Tax. Pennsylvania County Room Taxes – “The Good, the Bad, the Ugly, and the ???”. “The Good”.

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Pennsylvania Hotel Room Excise Taxes

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  1. Pennsylvania Hotel Room Excise Taxes Draft Presentation

  2. Introduction • Disclaimer • Focus on County Room Taxes – not the Pennsylvania Hotel (State) Occupancy Tax

  3. Pennsylvania County Room Taxes – “The Good, the Bad, the Ugly, and the ???”

  4. “The Good” • Provides substantial TPA/CVB monies for (convention) facilities, and promotion, advertising, and marketing of tourism, and tourism development

  5. “The Bad” • Enabling statutes are not uniform for all sixty-seven (67) counties • Close to 40 statutes • At least 11 different structures • Frequently hoteliers, TPA’s, County Solicitors “in wrong pew” • Ambiguous statutory language • Competitiveness of Room Rates • Little or no case law interpretation • Different rules/regulations/MOU’s for different counties • Counties have not provided a great deal of regulatory guidance

  6. “The Ugly” • Ambiguous language and terms • Counties can remove “uncooperative TPA’s” • Politics – Politics – Politics ! ! ! • Enabling Statute – general guidance – very political on local level • Challenge of County Commissioner change of administrations • Pressure on counties to find sources of general funding • State trend toward minimization/elimination of annual Tourism Bureau grants • Hotels and CVB’s not always “in sync” • Conflict between hotels v. convention/expo center hotels supported by Room Tax • Special challenges for multi-county TPA’s

  7. “The ???” • State – policy of encouraging Regionalization • Legislative philosophy – “broad brush” approach – County TPA and County Commissioners develop own customized, unique relationships

  8. History Adoption of Hotel Room Taxes has been on a “piecemeal basis” – starting in 1977

  9. ENABLING STATUTES • Eleven Classifications • Close to 40 Different Statutes

  10. HistoryEnabling Statutes Authorizing Room Taxes to Fund Facilities: • 1977 - Allegheny County and Contiguous Counties • 1982 – Convention Center Authorization for Montgomery, Delaware, and Bucks County • 1986 – Philadelphia • Lackawanna (40% of 7%) • Dauphin (70% of 5%) • Lehigh & Northumberland (18.75% of 4%) • Berks, Luzerne, and Lancaster (80% of 5%) • Erie (80% of 5%)* (100% of the additional 2% - now at 7% total tax)

  11. HistoryEnabling Statutes Authorizing Room Taxes to Fund Facilities: • 1990’s – First Enabling Statutes to authorize county collection of Hotel Room Taxes exclusively for general tourism and marketing purposes • Some Enabling Statutes define “County” in such a fashion that only one county qualifies. Cont’d

  12. Enabling Statutes Authorizing County Room Taxes for “Marketing and Development” • Philadelphia • Allegheny • Second Class – A (Montgomery, Delaware, Bucks) - 3% • Certain Third Class Counties (Blair, Cambria, Centre, Chester, Indiana, Lancaster, Lycoming, Mercer, York) -3% • Third Class County having a Second Class City (Lackawanna) - 4%

  13. Third Class County (Dauphin) -10%/20% of 5% • Third Class Counties (Lehigh and Northampton) – 68.75% of 4% • Third Class Counties (Berks, Luzern, Lancaster) -20% of 5% (Tax expires when bond debt service is paid in full) • Third Class (Erie) – 20% of 5%

  14. Third Class through Eighth Class Counties not otherwise authorized to tax (Armstrong, Beaver, Bedford, Bradford, Butler, Cameron, Carbon, Clarion, Clearfield, Clinton, Columbia, Crawford, Cumberland, Elk, Fayette, Forest, Franklin , Fulton, Green, Huntington, Jefferson, Juniata, Lawrence, Lebanon, McKean, Mifflin, Monroe, Montour, Northumberland, Perry, Pike, Potter, Schuylkill, Snyder, Somerset, Sullivan, Susquehanna, Tioga, Union, Venango, Warren, Washington, Wayne, Westmoreland, Wyoming) – 3% • Sixth Class County (Adams) - 3%

  15. Enabling Statutes use undefined terms – “reasonable individuals may differ” – legislative interpretation: “common and approved usage” • e.g. - What do they mean: “tourism”, “tourism development” • 2005 Amendments to “Remaining Counties” and some of the other county statutes (including York) – fund usage - appears more precise • Resistance by Legislators to specifically define terms • Lobbying Compromise – leave room for county by county customization

  16. Inherent Tension: • All Tax monies collected are to go to the TPA for the specific purposes defined in the Enabling Statutes • If a TPA is uncooperative, county can designate another non-profit entity as the “Recognized Tourist Promotion Agency”

  17. County Room Taxes for purposes other than convention centers initially adopted to provide revenues in excess of the Annual DCED appropriations. • Trend (and potential outcome?) -County Occupancy Taxes replace the Annual DCED allocation

  18. Customized Section for Local/County/Regional Specifics of the Law and Agreement with County Commissioners Examples?

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