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Relating to the use of hotel occupancy tax revenue by certain
municipalities, including the authority to pledge certain revenue
for the payment of obligations related to hotel projects.
No fiscal impact to the state is anticipated.
SB 1307 would authorize the City of Webster to use its existing hotel occupancy tax for construction, improvement, maintenance, renovating, and repairing of a "a coliseum or multiuse facility and related infrastructure or a venue."
Texas Action recommends opposing SB 1307 because it violates principles of limited governments and free markets. First, funding projects through the hotel and occupancy tax (HOT) offers little transparency—lawmakers have no way to verify whether the disincentive caused by the high cost of the HOT is offset by gains elsewhere in the tourism industry. Second, the tourism and travel industry, like any other private industry, should not rely on taxpayer subsidies in order to flourish. It is emphatically not within the proper role of government to use taxation in this manner.
We recommend following the Texas model and reducing or eliminating the HOT altogether. The best economic model is one in which regulation is light, sensible, and transparent.