HOUSTON, TX— The Texas Hotel & Motel Association (TH&MA) celebrated on May 21 when the state’s House of Representatives voted to overturn Senate Bill 5, which proposed adding a $1 per night surcharge in hotels statewide to fund a pollution reduction bill. Texas is already known for having some of the highest hotel taxes in the country, particularly Houston where the hotel tax rate is not only greater than New York City, but is also the highest in the country at 17%. “It’s almost impossible to check a guest out in Texas without them asking about the amount of taxes their paying,” said Scott Joslove, president/CEO of the TH&MA. The new legislation would have required Texas hoteliers in the 38 most popular counties to tack on between $20,000 and $200,000 per year in additional tax surcharges. But after three months of negotiating, the House voted to reject Senate Bill 5 by a margin of 112 to 29. “Our argument was that taxes in Texas were too high already,” said Joslove. He said that instead of adding taxes to hotel guests to fund the pollution reduction bill, money will now be coming from an increased green sheet fee, which is the fee out of state drivers pay to get their car re-titled with Texas plates. According to Joslove, while most states charge anywhere between $200 and $1,000 for the re-titling fee, Texas had only been charging $1. That fee has now been raised to $250, he said. So why were hotels even considered to fund a pollution reduction bill? Well, according to Joslove, the state’s government officials first claimed that hotels were large polluters. But the TH&MA refuted by noting that the EPA has never identified the hotel industry as polluters. Then legislators insisted that hotels used large amounts of electricity, which contribute to pollution. However, the TH&MA proved, through public utility reports, that hotels only account for 10% of the electricity consumption in Texas. Finally, the state’s government officials simply stated that hotels would benefit from the bill because pollution control is good for tourism and development, Joslove said. However, the TH&MA argued that restaurants, retail stores, and office buildings in Texas are not subject to special taxes and surcharges, and they too would benefit from tourism and business development. “We’re working to educate legislators and try to turn things around. They think that imposing a tax on the hotel industry is good because it means they have the opportunity to tax individuals that are not their constituents, which is always a popular option to consider,” he said. While the TH&MA was successful in defeating the surcharge this time, the association hasn’t been as lucky in the past. Two sessions ago, Texas passed statewide legislation that approved raising hotel taxes 2% on a local level, to fund sports stadiums and arenas. Though hotels do benefit from events held at stadiums, Joslove noted that, “only 5% of attendees at stadiums are tourists, yet in most cases hotels are paying up to 100% of development.” Overall, the state of Texas does not have many taxes, according to Joslove. There is no statewide corporate income tax, or corporate franchise tax, which means, “there aren’t a lot of taxing options in Texas unless they adopt a new tax,” Joslove added. “It’s easier just to raise the taxes on existing isolated businesses.”
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