NYC-WTC_000195490

NYC 9/11 Public Portal Document

HOTEL TAX a of The City has imposed a hotel room occupancy tax since 1970. This tax is levied in addition to the co combined City and State sales tax. Until 1986, the tax was imposed as a flat fee based on the daily rental an value of the hotel room occupied. The fee ranges from a minimum of $0.50 up to $2.00 per day for rooms co priced at $40 or more. An additional five percent tax on the rent or charge was imposed in, July 1986. It / Pr Subsequently, tax collections increased from $26 million in 1986 to $79 million in 1987. The State introduced in a special hotel occupancy tax of five.percent (effective June 1, 1990) on rooms costing $100 or more per day. pc 5 £■

The City rate was increased to six percent on September 1, 1990. The total tax rate payable on rooms priced W' over $100 in the City was therefore 19.25 percent, in addition to the $2.00 flat fee. One-quarter of the revenue in collected from the additioiial City one percent tax rate increase was earmarked for the development of tourism. fc Of this dedicated revenue, seven-eights of the one-quarter percent funded the New York Convention and cc Visitors Bureau, The remaining one-eighth was not dedicated to a specific organization but had to be C( expanded on tourism-related activities. In 1994, the tourism portion totaled $4 million. Itl •' ' ■ ' /

In 1994, both the State and City acted to reduce the hotel occupancy tax burden. Effective September 1, the State eliminated its five percent tax. Effective December 1, the City;repealed its onepercent tax increase,, ic including the dedication of the one-quarter percent to tourism, returning the rate to five percent. ' E The hotel tax forecast has been reduced by $3 million in 2001 to $237 million, growth of 8.5 percent from \ the prior year. Last year, fiscal year 2QQO was an excellent year for the hotel tax with growth of 9,8 percent, average daily room rates up 5,2 percent to $225 and average occupancy levels rising to 84 percent during the C' year. In 2001, however, the industry’s fortunes have been mixed. g n In the first half of the year, growth in average daily room rates was strong given the record levels of n h occupancy, but in December, with decreasing demand, average daily room rates fell from the prior year’s high levels. Occupancy rates have continued to sag and room rate growth has also slowed ip the ensuing months, a trend which is expected to continue amid a slowing economy and declining business travel. The increase in c the supply of hotel rooms, jparticularly low cost rooms, also means that hotel operators do not have the pricing 3 power they enjoyed in recent years. In 2001, growth in the room rate is forecast at 5,9 percent, but with a c further increase in the number of rooms, average occupancy levels are forecast to decline 1,7 percent. c r I The forecast for 2002 has been reduced by $2 milliori to $246 million, growth of 3,8 percent over the prior year. The total number of visitors to New York City is still forecast to rise this summer, however, growth in demand is riot expected fej keep pace with the increase in the number of rooms. Average occupancy levels are i forecast to (Recline to 80 percent for the year and room rates increase just three percent. In the outyears of the ( plan, moderate increases in the supply of rooms and slow growth in average daily room rates lead to average growth of 3.7 percent in hotel tax collections.

AUTO related TAXES

Auto Uife Tax: This tax is imposed by the City on privately-owned vehicles at the annual rate of $15 per vehicle. The tax was first imposed on October 1, 1974, and the amount has since remained unchanged. The tax is administered by the State Department of Motor Vehicles, with an administrative charge levied on the City for this service. In 1990, taxpayers were required to change from annual to biennial payments to conform to a change in State registration procedures. This new procedure resulted in roughly half of all registrants in 1990 paying for two years, while the other half continued to pay only the annual fee. Revenue from the tax is projected to be $32.2 jnillion in 2001 and in 2002. (

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