Motel Hotel Owners Debate Issues of Occupancy Tax
March 25, 2005
The Value to the Hotel/Motel Operator and his customer of a ½% reduction of the municipal portion of the Hotel/Motel occupancy Tax.
The Value to the Hotel/Motel Operator and surrounding community resulting from the reinvestment of ½% of the Tax to be utilized for marketing and promotion and improvement of the business community.
The impact of the loss of ½% estimates range from $40,000 to $65,000 from municipal funds to the residents and business owners.
APPLICATION OF EQUITABLE PRINCIPALS
The tax is generated by adding 3% to the total amount charged on each room rented in a Hotel or Motel. Each properties contribution or investment toward the 3% tax is directly proportionate to the properties total amount of rooms and additionally by the average price billed per room.
In reality it is the larger and more expensive hotels who contribute the greatest amount of moneys towards the total amount received by the Municipal Government. It is therefore the larger properties who are entitled to a greater stake in the decision making process concerning the economics of the Tax. Generally the owners of these properties agree that they would ultimately like to see the 3% tax entirely rescinded however a material disagreement exists between the owners with regard to the value and possible use of only 1/2% of the Tax, if the Municipal Government was to consider returning or rescinding that portion of the Tax to the Hotel Motel owners benefit.
The decision or vote on what position to take with regard to rescinding or reinvesting ½% is clearly an economic decision which must be based on the accepted economic principals and corporate governance.
In the present instance and in every business enterprise the share holders or investors are issued a number of shares based on the amount of there contribution or investment. In this case the business is the collection of the 3% Tax on behalf of the Municipality of Point Pleasant Beach and the investment is the tax revenue per room generated by each property owner.
It is therefore clear that each owner of a Hotel or property contributing through the collection of the Tax is entitled to one voting share for each room owned for which the tax is charged. Additional shares should be allocated to each property owner based on the amount of money charged for each there rooms which directly affects the amount received by the municipality. Lesser shares should be issued when factors to properties that provide tax exempt accommodations or long term rentals for which no taxes are collected.
In considering the aforementioned factors, voting must be based on the amount of rooms and value of the total shares,(amounts charged) (subject to the tax) and held by the individual property owners.
The reinvestment of the tax monies, (estimates range from $40,000 to $65,000 dollars), back into the community through the promotion and improvement of tourism, (Overnight Customers), provides value to the entire community. The monies would remain invested in Point Pleasant Beach.
Rescinding the tax takes from $40,000 to $65,000 dollars out of Point Pleasant Beach and returns it to the general public.
The rescinding of ½% of the tax only amounts to 50 cents on each hundred dollars charged on a room and would have little or no impact on improving business for the properties affected and should no be a factor in support of rescinding the tax.
It is for all of the aforementioned reason that we respectfully request that the tax monies under discussion be either reinvested through tourism promotion or alternatively retained by the Borough of Point Pleasant Beach and applied to our municipal