Relating to the rate of the hotel occupancy tax in certain municipalities and the use of certain revenue from that tax by those municipalities; authorizing an increase in the rate of a tax.
The bill stipulates that municipalities opting for this increase must allocate at least one percent of their hotel occupancy tax revenue towards specific public improvements. This includes funding for parks, civic centers, and other facilities that not only enhance the local infrastructure but also aim to attract visitors and tourists. Furthermore, municipalities that levy this tax at a rate exceeding seven percent can use the additional revenue for beautification efforts of main streets and improved pedestrian safety and accessibility.
Senate Bill 2189 aims to amend the Tax Code specifically regarding the hotel occupancy tax in certain eligible coastal municipalities in Texas. This bill allows municipalities with a population of 5,000 or less, which also have a ferry system part of the state highway system, to increase the hotel occupancy tax rate beyond the standard limit of seven percent, subject to a voter approval process. The new rate may be set up to eight percent, with the temporary increase authorized until December 31, 2035.
Although intended to enhance local tourism and infrastructure, there is scope for contention surrounding the bill. Critics may argue that such tax increases could burden small businesses and deter potential visitors if accommodations become significantly more expensive. Additionally, the provision requiring voter approval for the tax increase could lead to issues related to civic engagement and local government accountability, as the effectiveness of education around the importance of these increases may vary across different communities.