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By JENNIFER RAYMOND
Guests who stay in Kingston hotels will soon pay 5 percent more in taxes.
The Kingston City Council passed the second and final reading of an ordinance on Tuesday night to add an occupancy hotel/motel privilege tax to area hotels.
The council is hoping for a $70,000 boost in revenue that will help with balancing the budget.
Weve worked very hard in the budget process to stop the bleeding, Mayor Troy Beets said in an earlier meeting on the proposal.
The additional 5 percent will make the total guests will be expected to pay at 19.5 percent, including state and county taxes.
This would mean that Kingston would be higher than many surrounding cities.
Harrimans tax is 14.5 percent because a county tax is not included.
The city of Harriman passed its tax before the county tax was enacted. Thus, county taxes are not included.
The proposal of this tax was met with concern from local hotel/motel owners and Councilman Brant Williams.
Hotel owners argue their rates in Kingston are already lower than surrounding cities due to a lack of facilities like sit-down restaurants.
Why not go to Harriman where there are more facilities and more restaurants? said Bharat Patel, owner of Days Inn.
Now they may have to lower their rates even more to compete, he said.
They also worry that the increase in tax will cause travelers to drive past Kingston and stop at another exit.
We will be in the highest bracket in taxing in Tennessee, Patel said.
According to Patel, his occupancy rate is 25 percent less than the average U.S. occupancy rate, and his revenues have remained the same.
Williams said that, according to his research, when bed taxes are raised as high as 10 percent, owners usually see about a 3-percent decrease in their gross revenue.
We will have an increase in $70,000, but hotel owners will lose $46,500, Williams said.
He also pointed out that hotel owners will not be the only ones affected.
For every 17 cents that tourists spend at hotels, they spend 83 more cents in the area, he said.
For Kingston, he figured this would mean a loss of $275,000 worth of purchases.
Losing $275,000 out of the economy to get $70,000 doesnt make sense to me, Williams said.
Williams also called the taxation a quick fix and an effort to avoid making hard decisions.
The hotel owners and Williams also urged council to use some of the money generated for tourism purposes.
Lets work together and allocate a certain amount, Patel said.
Use the revenue to generate and promote tourism, Williams added.
Councilman Norman Sugarman pointed out that many fishing tournaments have been held in the county
and more will be coming, which he said has brought people to the hotels in Kingston.
Money is being spent
for things that will bring people to your hotels, he ad-
He also said that if a property tax would have to be implemented, the hotel owners would be worse off.
Although the city did not set aside money generated for tourism, they promised to help the hotel owners and look at ways to promote them.
The ordinance passed with only Williams opposing.
Kingston officials are now in the process of determining how quick the new tax can be implemented.
They have made calls to the state and the University of Tennessee Municipal Technical Advisory Service and are still waiting for a reply.