Special Session Alert! 2017 Montana Legislative Position on LC0007

Temporarily increase accommodations/rental car tax rates to offset fire costs

Tourism Matters to Montana OPPOSES the proposed 3% increase to accommodation tax and 6% increase to rental car tax

Tourism is the second largest industry in Montana attracting 12 million non-resident visitors who spend over $3 billion in our communities. State bed tax dollars are primarily spent to attract non-resident visitors to our state but that does not mean destination marketing organizations (DMOs) do not fully understand Montanans travel a great deal and spend hundreds of millions of dollars as well. Bed tax applies to all who stay in overnight lodging facilities including campgrounds.

+        A 3% increase of bed tax would make Montana’s rate the 2nd highest for states charging statewide lodging taxes in the United States.

+        Montana is already at a competitive disadvantage with other western states. A significant increase in tax would take away a powerful sales tool we use to sell Montana as an affordable leisure and business group travel destination compared to our neighbors.

+        Lodging taxes impact ALL travelers, not just non-residents. According to Voices of MT Tourism estimates based on hotel/motel spending data from the Institute for Tourism and Recreation Research, travelers staying at hotels/motels in Montana are approximately 55% non-resident and 45% resident. Residents of Montana would feel the impact of this increase as much as out-of-state visitors. Residents of Montana are avid business and leisure travelers who were heavily impacted by the very fires this bill is referring to. Communities who have already lost critical tourism revenue will now have to bear an additional obstacle in trying to make up for the loss of visitors due to fire and smoke – some communities and businesses lost over 30% of their anticipated yearly revenue.

+        For communities that have other taxes and fees on lodging and campgrounds, this increase takes overall taxes and fees to as high as 15%.

+        Should a general sales tax be implemented in the next several years, this would increase the overall taxes and fees to as much at 17% or 18% which completely removes us as an affordable destination especially for those who are traveling by air. Airline service to Montana is considered very high and DMO sales people often have to use our lower taxes as a way to offset the higher cost of air service.

+        Lodging taxes apply to ALL rooms and camping spaces less than 30 days and online booking tools such as AirBnB and VRBO are not all compliant. Short-term rentals are a very popular form of overnight accommodations with a large percentage of unlicensed owners and managers not complying with state and local laws including assessing, collecting and remitting bed tax to the State of Montana. Budget minded travelers (resident and non-resident) see a 10% savings as just that, a savings which drives revenue away from licensed operators and lodging/camping businesses. Enforcement of current bed tax laws on short term rental units would result in a direct increase of revenue without a tax increase.

+        The Montana Office of Tourism and Business Development has already seen a reduction of over $2 million which directly equates to a significant decrease in marketing dollars used to market Montana as a destination. Less marketing dollars and higher taxes equals significant disadvantage and loss of positive growth momentum and possible loss of a stable amount of marketing revenue and visitor ship over the next couple of years. Our Rocky Mountain state neighbors are ready and eager to host people who might have been thinking of visiting Montana.

The tourism industry, specifically regional and community destination marketing organizations (DMOs), understand the need to make the state’s budget solvent and feel it is necessary to part of the solution. But we feel the current increases of 3% and 6% is far too high and would negatively impact our ability to maintain our current ability to effectively promote Montana as an affordable destination. Tourism does not “just” happen. Montana’s travel promotion stakeholders work hard to bring travelers to Montana and budget reductions and tax increases like this make our jobs incredibly hard. Help keep this industry a growth industry by not increasing the bed tax.

We want to be a part of the solution and conversation to help our state government balance its budget and would like to be at the table should an increase of any amount be considered. We strongly feel any increase should be TEMPORARY and should be set to sunset as soon as the fire suppression costs from 2017 are recovered as the title of the bill refers to.

This 2017 Special Session Position Paper is supported by:

  • Tourism Matters to Montana
  • Visit Big Sky
  • Big Sky Chamber of Commerce/CVB
  • Billings TBID
  • Destination Missoula
  • Missoula TBID
  • Missouri River Country
  • Glacier Country
  • Yellowstone Country