I complained here earlier this year about the Dana Point City Council’s vote to implement a new additional hotel tax and taxing district last year during the middle of a recession and at a time of the highest unemployment in recent state history. The city already imposed a 10% "transient occupancy tax" on top of the 8 3/4 % state sales tax. The new tax adds another $3 a night to a hotel bill. Republicans on the council who voted for it claimed the hotels themselves wanted the new tax. Then, after implementation of the new tax district, the biggest alleged supporter of the tax, the St. Regis Monarch Beach Resort, bankrupted itself. I’m sure the new tax had nothing to do with the bankruptcy, but it was a sad poetic justice to the shaky justification offered by tax-raising Republican Lisa Bartlett and Joel Bishop for their votes.
But the Dana Point tax-raisers actions pale in comparison to what is going on in San Francisco. Tourism in San Francisco has been troubled since the 9/11 attacks. And I don’t see The City’s tourism recovering too quickly given the implementation of the 2006 "health" tax that has caused restaurant tabs to skyrocket, and may be playing a role in the shuttering of some of the finest places in town. San Francisco sales taxes, applicable to restaurant bills, are already at a statewide high of 9 1/2 %. The "health" tax was intended to force restaurants to collect tax dollars for the purpose of providing health insurance to uninsured workers. The tax is progressive based on the number of employees, and apparently ranges from adding $1 to your meal tab, to up to an additional 4%. For example, my wife and I had lunch today at Alioto’s on the Wharf (yes it is a tourist trap but the view is great and the food far better than its’ Zagat rating). The meal tab was $111.05. But the added taxes were $15.41, calculated, I am told, at the 9 1/2 % sales tax plus a 3 1/2% health tax. That is 13% added tax! With a good fair tip, our lunch soared to close to $150.
It is little wonder, then, that the famous Aqua Restaurant (which once had an outlet at the now bankrupt St. Regis in Dana Point) unexpectedly closed its doors in The City this week. A few months ago, the famous Wolfgang Puck-founded Postrio, which has a clone of itself at the Venetian Hotel in Las Vegas, also closed its doors to the S.F. dinner trade. I refer to a discussion I had with Rudy Guilliani few years ago. He told me that high hotel taxes in New York were devastating to the hotel convention trade and that among his first actions as the new Mayor were to repeal many of these hidden extra fees. A result was that tourism in New York City expanded after the tax cuts. It is beyond me how any city that depends on tourism can impose all these various taxes on their business, big or small, during a time of economic crisis. I have no doubt that the 13 to 13 1/2% in taxes that are required to be added to dinner bills in San Francisco by Gavin Newsom and the California Legislature have played an unwelcome role in all this, and I hope that Republicans not only in Dana Point but across the state are taking note of the results of high taxation at any time, especially during a recession.
May 2nd, 2010 at 12:00 am
Jim, your point on the Dana Point TOT tax is well taken. We need to have people of principle in local office, not just people that look at the numbers.
If you set aside the concept of what is an appropriate role for local government, I can see where the idea has merit.
If the hotels in a city want to spend money to promote tourism (sell hotel rooms), by getting elected council members to enact a tax, then instead of raising their room rates to pay for marketing, it shows up in the “city taxes” part of the bill, and they can say that they don’t control those, which is technically correct. The city then spends the revenues from this TOT tax in “close consultation” with the hoteliers — and all is great, right?
WRONG.
Ignored is the idea that there should be a limited role for government, and that this kind of situation is a perversion of the proper function of government — which is not to promote tourism (that is why there are voluntary associations like local Chambers of Commerce, and Hotel Associations).
May 3rd, 2010 at 12:00 am
Welcome to San Francisco.
The additional 3-1/2% is not a city sales tax. The neo-socialists who hide behind the “progressive” label passed an ordnance that charges charge employers of over 20 employees who do not provide health insurance $1.31 per hour worked;$1.90 for employers of 100 or more. Some restaurants believe that putting on the bill as a tax is an effective way to show the public the costs to the public. Others just add it to the menu prices. In addition there is mandated sick leave of between 40 and 72 hours depending on hours worked and a $9.79 minimum wage.