TN county officials: Municipalities need right to tax hotels

By TNWatchdog Staff on December 9, 2013
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By Chris Butler | Tennessee Watchdog

NASHVILLE — State law lets Wilson County commissioners fund a proposed convention center by implementing a special tax on out-of-town visitors who use area hotels, said County Mayor Randall Hutto.

Without the state granting that power, county commissioners couldn’t use this tax revenue to pay for the Expo Center, which, if built, would showcase trade shows and conventions, Hutto told Tennessee Watchdog.

Additionally, Hutto said that if the proposal, as it currently exists, passed into law today it would have a yearly deficit of $260,000.

Randall Hutto

Randall Hutto

“Wilson County did not create that hotel/motel tax,” Hutto said. “It was created by the state of Tennessee, and that is a vehicle to create something that puts more heads in beds for hotel folks.”

Hutto was responding to complaints three prominent hotel owners have made about the proposed increase in the hotel/motel tax they say is already one of the highest in the nation.

Officials at the Wilson County Fairgrounds, site of the proposed center, are trying to decide what they can do to fill that yearly $260,000 gap, but they haven’t formally submitted any ideas, Hutto said.

The three hotel owners told Tennessee Watchdog last week the proposed tax increase of 3 percent would hurt their businesses and prompt customers to use competing hotels in other counties. Most of those customers, they said, are only spending the night while traveling to events in other counties or states.

The start of such a trend will have a ripple effect on the rest of the county, as fewer people will eat out and buy local gasoline, said Roshan Patel, owner of the La Quinta Inn off Interstate 40 in the county seat of Lebanon.

Quoting a new feasibility study written by Middle Tennessee State University officials, Hutto said visitors would have business that lasts more than a day at the Expo Center. That would require them to use area hotels — and pay for the tax revenue needed to fund it, he said.

“As of right now, no, this county doesn’t have anything that would make people come and stay a few days,” Hutto said.

Any tax increase in Mt. Juliet would push that hotel tax rate even higher than Lebanon’s, at 22 percent, when combined with the city’s hotel tax rate of 5 percent, the county’s current 5 percent rate and a 9 percent sales tax.

In contrast, Patel, along with Bhavin Ghodasara, who owns the Hampton Inn in Mt. Juliet, and Sanket Patel, who owns the Quality Inn in Lebanon, say the center would only attract local visitors. Those visitors will not use their hotels, they said.

County Commissioner Jeff Joines, a strong advocate for the center and the higher tax, told Tennessee Watchdog in November that county residents would find the tax acceptable as it would be a tax on tourists only.  

Contact Christopher Butler at chris@tennesseewatchdog.org. or follow him and submit story ideas on his official Facebook page.

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Posted under Featured, Government Regulation, Government Waste, News, State Government.
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