McMinnville officials are moving forward with a measure to levy a 3 percent tax on local motels. The state will now decide if it approves.
The Board of Mayor and Aldermen met Tuesday night and approved with a vote of 5-1 a resolution that will be presented to the Tennessee General Assembly by state Sen. Janice Bowling during this legislative session. If approved by the state, the city can then levy a 3 percent tax for tourism develop.
It passed with a vote of 5-1. Mayor Jimmy Haley, Vice Mayor Ben Newman and Aldermen Everett Brock, Ryle Chastain and Kate Alsbrook voted in favor of it. Alderman Steve Harvey voted against it. Alderman Mike Neal was absent.
Warren County government already levies a 5 percent motel tax. The city’s proposed tax would be in addition to that.
Harvey voiced concern for the higher tax within the city being an encouragement to build outside the city limits.
“Is anyone besides me concerned this might discourage a new hotel or motel from locating here?” asked Harvey. “We would be 3 percent higher tax than if they located in the county, right? We went to the tourism meeting at the chamber and that was the one thing we came out of there with: we needed a new hotel here. I just hate to see us do anything to discourage a hotel from coming. They are passing it on to the user, but it does cause you to charge more.”
According to county records, the county’s motel tax was levied by the Private Act in 1991 and in fiscal year 2015-16, it generated $59,464. The revenue goes into the Debt Service Fund.
Alderman Everett Brock says a motel tax does not have an impact.
“According to the study the state of Tennessee did that legal counsel disseminated to us, the state studied that and they said it had no effect,” said Brock.
The study by the state, said Harvey, was to determine if lodgers considered tax when selecting a place to stay. They did not.
“They said it had no effect on whether someone would choose to rent a room or not based on that,” said Harvey. “It didn’t say if a business would be discouraged or, furthermore, encouraged to go to an area that had a lower tax rate than another area. It just seems like we are levying a tax to increase tourism, but the tax could actually hurt tourism.”
Haley said other cities have placed a tax and it was not a deterrent.
“Sen. Bowling didn’t think so,” said Haley. “Where it has been passed in other places, and several other cities have done this, it has not had that effect.”
Bowling also said, according to Haley, the city could request a 5 percent tax, which is the maximum allowed and would mean a combined 10 percent tax between city and county governments. However, she expressed concern an additional 5 percent might not pass Tennessee General Assembly muster and 3 percent would.
The resolution will be sent to Bowling for state consideration.