Let voters decide on hotel tax

Why shouldn't voters be allowed to increase the hotel/motel taxes charged in their cities?

Local leaders and residents are the best judge of whether a city or county's hotel business would support a higher tax rate, and if there are worthy investments to make with that revenue.

If a majority of local voters choose to raise the hotel/motel tax in their area, they should be allowed to do so. It doesn't make sense for them to be hobbled by statewide limits.

State legislators should lift the 7 percent cap on hotel/motel taxes and let the people decide if they want a higher tax rate to help fund local projects - like the new $67 million convention center in downtown Cedar Rapids - or other local needs.

At the very least, they should grant Cedar Rapids' city officials request to lift the cap in order to help generate matching funds for the convention center project.

Mayor Ron Corbett's proposal to use additional hotel/motel tax revenue to help fund a $17 million local match for the center makes a lot of sense.

The convention center and upgraded U.S. Cellular Center will be a significant draw to the area - hotel owners and a slew of other businesses stand to gain much by the projects' completion.

The city takes in about $2.5 million a year from hotel/motel taxes but would need an additional $1.2 million to $1.3 million to finance the bonds for that match. Unfortunately, it's out of local leaders' hands.

Because although local voters have the final say in whether or not hotel/motel taxes are levied in their city or county, they don't have the final say in how much to levy.

According to the Iowa Department of Revenue, more than 100 Iowa municipalities and another dozen unincorporated areas levy hotel/motel taxes.

The decision whether or not to do so is made by voters in a simple majority vote. If voters approve it, the tax only applies to the hotels and motels located within that city or unincorporated county areas.

The tax must be levied in increments of one or more full percentage points, but can't exceed 7 percent.

But voters should have more discretion in deciding how much tax is appropriate. Local voters and local leaders are in the best position to make that decision.

As the convention center project clearly shows, there are worthy local investments that would warrant an additional tax - at least temporarily. Legislators should let voters decide.

Gov. Chet Culver has said he supports allowing for the higher tax to help with flood recovery in Cedar Rapids.

His opponent, former Gov. Terry Branstad, is opposed to the idea. “In this economic time, I don't think we should be raising taxes,” he has said.

That may be true in the case of hotel/motel tax, or it may not. But it should be the voters who decide.