Our lodging and auto rental tax is too low.
What we think:
We’re missing out on millions largely paid by tourists.
Tell us what you think:
Send us an email at firstname.lastname@example.org.
Which taxes do we most dislike? For many of us, the most recent payment leads the pack. Income tax, property tax, sales tax (especially when you buy a vehicle), miscellaneous fees and charges that take you by surprise — take your pick. But there’s one city tax that’s probably not on your list, since you’ll never pay it unless you own a short-term vacation rental, a hotel or an automobile rental company.
That would be the Lodgers and Automobile Rental Tax, levied only on short-term car or lodging rentals. The charges are a modest 2 percent for hotel, motel or home rentals and 1 percent for auto rentals. In 2019 LART brought in about $7.5 million, an impressive sum unless compared to the city’s $320 million budget. Interestingly, the city gets very little of the take.
“The LART fund is administered by City Council, with the guidance of the LART Citizen’s Advisory Committee,” the city’s website explains. “The purpose of LART funding is to provide funds for marketing and other qualified expenses to support special events that attract visitors to the City and to the Pikes Peak Region, encourage tourist activity, provide economic and cultural benefit, enhance the quality of life in the City and engage the community.”
Forty-two organizations received LART funding that year. Visit COS led the pack with $3.86 million, followed by Parks, Recreation and Cultural Services ($350,000 for Garden of the Gods), the Cultural Office of the Pikes Peak Region ($200,000), Colorado Springs Chamber & EDC ($300,000), and Sports Corporation ($200,000). Other substantial grants went to El Pomar’s Regional Air Service Task Force ($150,000), the Philharmonic for summer symphony ($146,500), and to Hot Apple Productions ($134,000 for Labor Day Lift Off). There were dozens of smaller grants, many focused on events such as the Hill Climb, the St. Patrick’s Day Parade and the Starlight Spectacular.
Such support is welcome, but our levies are far less than those of our peer cities. Pueblo, Greeley and Fort Collins lodging taxes are approximately 4 percent while Denver leads the pack at a whopping 10.75 percent. Auto rental taxes in other jurisdictions are also about twice as high as ours.
As Visit COS reminds us, “The tourism industry is highly competitive, and visitors need to be continually, and proactively invited to our destination.” Among 150 U.S. cities, we’re near the bottom in tourism-supporting tax collections.
It’s long past time to match our Colorado competitors and increase the lodging tax from 2 percent to 4 percent and the auto rental tax from 1 percent to 2 percent. As the law requires, it can only be done by a vote of the people.
While the 100 percent rate increase is a scary number, the dollar amounts are relatively insignificant. A $125 hotel room would cost an additional $2.50, while a $75 car rental would increase by $.75. Given that hoteliers and auto rental companies in every jurisdiction invariably add multiple additional fees to the base room or car rental price, the LART increase will be even less noticeable. No city provider will be exempt, and no one will be competitively disadvantaged.
Tourism-related businesses and events will benefit directly, as will most local businesses. Doubling LART revenue doesn’t mean that current recipients will get twice as much dough, and nothing will change. It’ll open the doors to new ideas and new entrepreneurs, as well as extending significant support to growing organizations. Best of all: It won’t be a one-time shot in the arm, but a permanent source of funding for a vital business sector.