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Taxed to the Max: Hotel Tariff at State Ceiling

Port Washington recently hiked its hotel tax rate from 7 to 8 percent, the highest allowed by state law. Some residents weren't happy, but the city isn't alone in making that move.

A recent increase in Port Washington's hotel tax rate from 7 to 8 percent was met with some disapproval in the community, despite city officials' optimism that the extra money will help draw more tourism.

Port Washington's hotel tax rate is now the highest allowed under Wisconsin law, but the city isn't alone in charging that amount. According to a Wisconsin Taxpayers Alliance Study of Room Taxes and Tourism Development, other cities throughout Wisconsin with an 8 percent hotel tax rate include:

  • West Bend
  • Sheboygan
  • Eau Claire
  • De Pere
  • Johnson Creek
  • La Crosse

Nearby Grafton is at 7 percent, as are many other area communities. Another local tourist destination, Cedarburg, is just 5 percent — but the community doesn't have any hotels of note. Here's a list of hotel tax rates, according to the Wisconsin Taxpayers Alliance study, in the Milwaukee area:

  • Saukville — 7 percent (as of 2010);
  • Grafton — 7 percent (as of 2010);
  • Racine — 8 percent;
  • Brookfield — 8 percent;
  • Brown Deer — 7 percent;
  • Glendale — 7 percent;
  • Greenfield — 7 percent;
  • Oconomowoc — 6 percent;
  • and Wauwatosa — 7 percent.

Some cities, such as Madison and Oshkosh, have higher rates than 8 percent, but that's because of the construction of convention centers within those municipalities — an exception allowed under state law, said Dale Knapp, research director with Wisconsin Taxpayers Alliance. Madison's rate is 9 percent, while Oshkosh charges 10 percent.

What citizens think

Patch users who commented on the original story were not impressed with either the appearance of the increase, or the money it would generate.

"We have spent the last few decades driving meaningful commercial enterprises to Saukville and Grafton under the name of preserving our 'quaint New England charm,'" Patch user Terry commented on the article announcing the increase. "Now when we realize that nobody does come to Port, our solution is to raise taxes on those that do to try to sell a city that just doesn't have that much to draw people here."

User Rik Kluessendorf echoed those sentiments, wondering if the city's focus is a bit off track.

"Would the board's time be better spent working on enhancing the city so that it is more attractive to tourists, not more expensive?" Kluessendorf wrote on that article.

The one percent increase raises the hotel tax rate on a room stay of $89 a night by $0.89 per night. If a visitor were to book a room at that rate for one week (6 nights) the total tax bill would be $5.34 greater.

That tiny amount, one commentor pointed out, shouldn't be enough to deter visitors — but he's not sure the extra $30,000 the increase is estimated to bring in will make a difference, either.

"I don't think that a few dollars per night would prevent me from staying in a particular area, if I had a reason to be close. In the end I don't think the tax change is going to deter a large number of visitors, but at the same time I don't think that $30K is going to bring that many in," Greg wrote on that same article.

Hotel tax rate increases have been a trend over the years,.

"In 1994, just over 25 percent of municipalities had a room tax rate greater than 5 percent," the Taxpayers Alliance study said. "That increased to 40 percent in 2003 and 48 percent in 2008. In 2012, 49 percent reported room tax rates greater than 5 percent."

Greg Huegerich December 11, 2012 at 03:04 PM
Cedarburg does have some Bed and Breakfast locations downtown, not major hotels, and I think they're fairly expensive, but very low occupancy. Not sure if the same taxation rules apply to those types of establishments, but given the smaller size, not likely to be a big revenue swing either way. While I'm not a fan of the increase, its being used for a decent purpose (for now). I'd also throw in .... when I travel, computing the hotel tax rate is probably the last thing I think about when selecting a place to stay. Business travellers are more likely to stay near the freeway, vacationers may prefer a lake view in downtown port. Given that the hotel rates are all over the map in the first place, and the tax gets added to that price .... it'll hopefully be a non-issue moving forward.

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