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Hotel/Motel Tax Hike Passed By County

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On Thursday, the Suffolk County Legislature voted through legislation that will increase the county hotel/motel tax from .75 percent to three percent. The law is expected to go into effect as early as December, much to the outrage of local lawmakers and hotel owners.

“There was zero input from people in our industry … There was no outreach,” argued Nathiel Egosi, owner of the Sag Harbor Inn. “This is going to have an adverse impact on our business. People are on a tight budget and they will now see that it is less affordable [to stay on the East End]. Some people think charging three percent more isn’t a lot, but how about cutting a salary by three percent?”

Suffolk County Legislature Presiding Officer William Lindsay maintains that the money will help the county recoup some of the $100 million increase from the MTA payroll tax.

“Nearly all of these outrageous taxes we pay to the MTA go to support services for New York City residents,” said Lindsay. “This increase in the hotel/motel tax is going to have almost no impact on Suffolk County residents but it will recoup from visitors from New York City some small percentage of the hundreds of millions of dollars we pay every year to support New York City’s buses, subways, bridges and tunnels.”

Egosi argues that many of his guests hail from Long Island and Europe, not New York City. Further taxing businesses that already pay the increased MTA tax, added Egosi, will stymie economic growth.

County Legislator Jay Schneiderman also disagrees with Lindsay and fought to table the resolution on Thursday. But without the backing of fellow lawmakers, the bill was passed 13 to five.

“Many representatives of the hotel industry are representing that their revenues were down between 20 to 30 percent over last year,” contended Schneiderman during the legislative session on Thursday. “You may have convinced yourself that this tax won’t deter business, you are wrong. Anything that makes it more expensive to stay in an area will — over time — drive visitors to other tourist destinations that are more affordable.”

“My district contains more than half of the total number of hotels in Suffolk County,” added Schneiderman. “This hotel tax was put together without consulting the industry. The tax is estimated to collect an additional $5 million in tax revenues. Around $2 million goes to help the county budget. Of the remaining $3 million, around $700,000 will go to operate the Vanderbilt Museum. Another $100,000 to the Walt Whitman Museum birth place. It is interesting that this bill which purports to help tourism contains two earmarks in the Huntington area where only four percent of the county’s hotels are located and none for anywhere else — including the South Fork.”

According to Lindsay, the hotel/motel tax generated $1,905,406 in 2008, at a rate of .75 percent, but is expected to garner $1,653,892 in 2009. But with hotel/motel tax rate increasing to 3 percent next year, adds Lindsay, it is estimated that it would yield nearly $7 million dollars. The resolution further explains that the tax will be tacked onto daily rental rates per room.

Schneiderman contends that the increased tax will depress both tourism on the East End and sales tax revenue. A comprehensive study of the ramifications of increasing the hotel/motel tax, argued Egosi, wasn’t conducted. Egosi didn’t find out about the tax until a week before it was voted through the legislature.

“There was no input [from hotel owners] about how to better allocate that money,” contended Egosi. “[The tax] could have been good for business, if businesses were consulted about where more money should be spent to promote and encourage tourism [in the county].”

“I pleaded on the floor to wait one month to get the input of people in the industry,” added Schneiderman.

In the resolution, it is written that the tax money will be re-circulated to venues of tourism, with 24 percent of revenues to be given to the agency that promotes Suffolk County tourism. However, a large percentage of the collected funds are earmarked for the county parks and recreation department. Remaining revenue will be deposited to the general fund. According to the legislation, the hotel/motel tax will be in effect through 2015. Suffolk County Executive Steve Levy still has to sign the bill into law.

“We are getting taxed to death,” remarked Schneiderman. “Or at least taxed out of business.”