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Current law states that a municipality may dedicate the revenue derived from the hotel occupancy tax for the payment of principal of or interest on bonds or other obligations that were issued to pay the cost to build a convention center hotel or historic hotel. Additionally, certain qualified hotel projects may receive rebates of sales, use, and all hotel occupancy taxes paid.
HB 2538 amends Tax Code relating to funds received by certain municipalities from qualified hotel projects. The bill would direct the rebates received by these hotel projects back to the municipalities to be used on hotel and convention center projects.
The bill is a local bracketed bill which would only apply to bracketed municipalities.
HB 2538 violates our principles of limited government, individual liberty, and free markets because the hotel occupancy tax distorts the free market by favoring certain businesses over others, raises prices on consumers, and encourages government spending. Even though the purpose of this tax is to promote economic development, allowing another municipality to use this tax revenue for tourism projects will simply add to the government-created distortions which are a detriment to the free market. Economic development activities should be conducted by the businesses which will benefit from increased patronage of their businesses as a result of the economic development, not by government entities picking winners and losers in the economy. For these reasons, we oppose HB 2538.