Hotel Tax Gains New Life

By: Grace Rauh

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Tens of millions of tourists pour into New York City each year, spending big bucks on hotel stays.

There's been a reluctance to do anything that could harm the industry, but as the city's financial picture worsens, support for a proposal to hike the city's hotel tax is growing.

"I think moving forward on the hotel tax is something we should do given how bad the fiscal situation is and how bad our budget is right now," said City Council Speaker Christine Quinn.

With Quinn's backing, given on Monday for the first time, a bill to raise the tax from five percent to nearly six percent is likely to win approval in the council. If enacted, it is expected to generate between an additional $100 to $140 million annually for the city.

In the past, Mayor Bloomberg has called the tax a "terrible idea." A spokesman on Monday wouldn't directly comment on the Council's proposal.

Brooklyn Councilman Lewis Fidler, who sponsored the bill, said he doesn't think the tax increase will hurt tourism.

"If someone is coming here and spending $300 a night, think about it for a second. That means they are coming to New York, spending a week in a hotel, spending $2,100 for the hotel room, but that last 20 bucks we are adding to that bill is going to stop them from coming? Doesn't make any sense," said Fidler.

Those in the hotel industry disagree.

Jonathan Tisch, Chairman and CEO of Loews Hotels, said, "We want to have people come to New York, make it economical, and tell them the reasons why they want to come here. Not the reasons why they shouldn't come here. And increasing the tax would be a signal that we don't want these visitors."

The debate over a hotel tax increase comes as the mayor and council are holding closed-door talks about how to close the city's budget gap. A bill to raise property taxes mid-year will be introduced at the council's Tuesday meeting.

On Thursday, a lawsuit filed by several council members to force the mayor to send out a $400 property tax rebate check New Yorkers had been told they'd get this fall, is scheduled to be heard in court.

Budget negotiations are ongoing and Quinn said that no date, not even a tentative one, has been set for a vote on the tax.