The state House Tourism and Recreation Development Committee on Wednesday renewed the debate on the hotel occupancy tax law in Pennsylvania.
York County Republican Rep. Ron Miller continues to push a bill that would give county commissioners the authority to raise the hotel tax in the county to 5 percent from 3 percent. His House Bill 1486, which is in committee, actually focuses on nine counties, including Lancaster County.
Lancaster has a 3.9 percent levy on hotel-room stays and an additional 1.1 percent tax on these stays plus a broader range of lodging such as bed and breakfast inns.
If counties choose to enact the higher tax, the revenue will continue to be collected by the county and distributed to the local visitors bureau, which is required to spend it for tourism purposes, according to Miller’s bill.
The committee hearing brought up several hotel tax concerns — namely, the piecemeal approach taken since hotel room taxes started in Pennsylvania in the late 1970s.
“Since that time, several pieces of legislation enabling different rates, methods of collection and uses for this tax have been passed — and have resulted in a complex system that has some wide variations throughout the commonwealth,” said Rep. Jerry Stern, R-Blair County, chairman of the committee.
Several testifiers asked the committee to consider and pursue a more coordinated and consistent approach for any updates. Most also noted that the original intent of this tax was to fund local tourism promotion agencies and to be used exclusively for general tourism and marketing purposes.
Rob Fulton, president and CEO of the Pennsylvania Association of Travel and Tourism, noted that more recent legislation enabling the tax in several counties is markedly ambiguous in how much of the fees collected are designated for tourism promotion, as opposed to other uses that may be defined by a specific county’s leadership — such as revenue to support local police or municipalities.
“Our association and membership are very concerned about the erosion and continued attempts on the county, township and municipal level to divert the room tax dollars away from the appropriate uses,” Fulton said. “We are also very concerned about the piecemeal approach on a county-by-county basis. It puts the (tourism) industry in a difficult position and continues to create a fragmented approach.”
“Pieces of legislation are introduced every session that aim to change the enabled tax rate in multiple counties. Many of these bills also legislate how the money should be spent, making enforcement difficult,” said Barry Kidd, testifying on behalf of the Pennsylvania Restaurant and Lodging Association.
Kidd also expressed concern that not every overnight stay is subject to the hotel occupancy tax.
“This tax should be applied to all short-term stays,” he said. “In addition, we recommend closing the hotel tax loophole where online travel companies can remit less sales and hotel tax than in-state accommodations. Closing this loophole ensures all taxes are remitted on the amount charged for a room, potentially generating an additional $3 million to $4 million in state sales tax and hotel tax.”
Additional hearings with the committee on both statewide tourism funding issues and proposed fixes to the hotel tax are expected. The General Assembly is not back in session until Sept. 23.