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Philadelphia may get hotel tax hike; no such increase foreseen here
Tuesday, June 17, 2008

HARRISBURG -- Philadelphia may get a new taxing option that would generate an additional $7.5 million to promote the city's tourism attractions like Independence Hall and its expanded convention center.

Yesterday, the Democrat-controlled House Finance Committee approved House Bill 2167, which would give Philadelphia City Council the authority to increase its tax on hotel/motel rooms from the current 14 percent to 15.5 percent. But don't expect a similar tax increase for Pittsburgh.

The current hotel room tax generates about $90 million in Philadelphia, most of which goes to pay off debt and for general city expenses. A small slice of the 14 percent tax now goes for advertising and marketing of tourist attractions.

The Philadelphia Convention & Visitors Bureau, its hotel association and city officials all support the increase of 1.5 percentage points as a "hospitality promotion tax," legislators said.

The additional 1.5 percent would raise an extra $7.5 million, all of which must go to promote tourist attractions in Philadelphia, including the 15-year-old Pennsylvania Convention Center, which is undergoing an $800 million expansion paid for by state slot machine tax revenue.

In Allegheny County, the current levy on overnight guests who rent hotel/motel rooms also is 14 percent. Half of the local revenue comes from the county's 7 percent sales tax and the other half from a 7 percent county room tax.

State Rep. David Levdansky, D-Forward, House Finance Committee chairman, said hotel/motel room rates in Philadelphia are now somewhat lower than those in nearby cities with which it competes for tourists, including New York, Baltimore and Atlantic City, N.J.

Philadelphia has the ability to raise the nightly cost of its hotel rooms a bit with a higher room tax without losing tourists, but Mr. Levdansky didn't think that was true in Pittsburgh.

"I don't think [a new hospitality tax] would happen in Allegheny County," because it could result in tourists and visitors renting hotel/motel rooms outside the county, he said.

He didn't think hotel owners would support it because an increase in the overall hotel tax "would put hotels in Allegheny County at a competitive disadvantage."

Mr. Levdansky noted that the bill that passed yesterday is merely "enabling legislation," and still must be approved by the House and Senate. Philadelphia City Council also would have to formally enact it, but that could happen this fall.

Bureau Chief Tom Barnes can be reached at tbarnes@post-gazette.com or 1-717-787-4254.
First published on June 17, 2008 at 12:00 am
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