How much tax is enough?
On November's ballot, Arnolds Park voters will see a proposal to increase the Arnolds Park hotel-motel tax by 2 percent. If passed, Arnolds Park's hotel-motel tax would increase from 5 percent to 7 percent, a 40 percent increase. This would be on top of a 5 percent sales tax for a total tax of 12 percent on lodging bills. Those of us who host lodging guests in Arnolds Park believe the excess tax is not needed and would be detrimental to Arnolds Park tourism, the city's primary industry.
The amount of hotel-motel tax collected has steadily risen year after year. Arnolds Park collected $60,533.86 in FY 1996, the first full year of the tax. The FY 2018 tax was $477,862.64. The significant increase in collections is attributable to a previous 2 percent tax increase in 2008, more lodging rooms and, in part, inflation.
Under Iowa law, 50 percent of the tax paid must be invested in tourism. The city uses the remaining 50 percent as it chooses.
Around 100 additional lodging rooms will be available in 2019. That means more tax will be collected, even without an increase in the tax. If the city will also collect the lodging tax from individuals who offer short-term rentals (such as through VRBO, Okoboji rentals, Homeway, Home To Go, etc.), there would be that much more tax money available without burdening businesses already collecting the tax.
How much money is enough for the city? The city collects nearly a half-million dollars annually now. More money is on the way next year from the increase in rooms. There is no need for an increase in the hotel-motel tax, which is a deterrent to cost-conscious customers.