Don't be too quick to go for bed-tax hike

info@islandpacket.comOctober 21, 2012 

The issue of tourism marketing in the Lowcountry raises more questions than answers, and so it is with a proposal from Hilton Head Island's mayor to lift the state-imposed cap on local accommodations taxes.

Drew Laughlin wants to raise the cap -- set by the legislature at 3 percent -- to allow the town to bring in more money from short-term lodging to pay for tourism marketing.

Hilton Head relies now on money generated from a separate accommodations tax to pay for marketing handled by the Hilton Head Island-Bluffton Chamber of Commerce, the town's designated marketing organization.

"Our total marketing budget coming out of (accommodations tax) is $1.3 million or $1.5 million a year," Laughlin said during his recent State of the Region address. "That is a paltry sum to market a destination community. Myrtle Beach outspends us 12 to one."

This argument has been propounded for at least the past two years. We heard it in 2010 when the chamber wanted a local option sales tax for tourism marketing, similar to the one passed in 2009 for Myrtle Beach.

That idea met stiff opposition and eventually was dropped.

The total tax now on short-term lodging is 10 percent. A 2008 study by The American Hotel & Lodging Association pegged the national average tax for hotel rooms at about 12.6 percent per night.

Supporters of an increase say we have room to go up. But how much? The 3 percent cap was put in place to keep a lid on local governments' raising taxes so high that they hurt business.

To get the cap lifted, lawmakers would have to change the 1997 Local Government Fiscal Authority Act. The law was a compromise pushed by the S.C. Chamber of Commerce and state associations for counties, municipalities and school boards.

The groups worked to bridge divisions created the year before as a result of the proposed Taxpayer Protection Act. That chamber-backed bill failed after local government leaders across the state condemned its attacks on home rule and local taxing authority.

It's worth noting that the 2009 Myrtle Beach sales tax was the result of legislation written in such a way that it only applied to Horry County. That was the tack taken for the failed Hilton Head effort. The bill was written to apply only to Beaufort County.

That's special legislation, and it's unconstitutional, but that doesn't stop lawmakers from doing it. If Hilton Head were to push for lifting the state-imposed 3 percent bed-tax cap, the bill should apply statewide.

But let's set aside that issue. Before lawmakers raise a tax -- even one on non-voting vacationers -- many questions should be answered, starting with the efficacy of the chamber's current efforts and ending with whether more money should go to this group.

We should know exactly how and how much money is used to market the area as a destination. It should include total dollars contributed by the private sector. How would any new money be spent?

Certainly, many other questions have come up in the past two years on this subject. They include whether a separate visitors and convention bureau should be established.

Right now, the island's Visitors and Convention Bureau is a division of the chamber. It's been that way for decades, but that doesn't mean it's the best way to go.

The town should lay out all the money raised from tourism-related taxes, which also include the 2 percent hospitality tax on prepared food and beverages, and see how that money is being spent.

It's also troubling to see supporters raise the argument that this would be a painless tax.

Charlie Clark, spokeswoman for the Hilton Head-Bluffton chamber, said of the idea: "Our residents don't have to put in a single dime, and they would greatly reap the benefits."

The same could be said for our school operations tax exemption for resident homeowners, and look where that has gotten us.

We need better reasons than that to raise any kind of tax.

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