County tax increase has businesses worrying about the future
July 22, 2018
Sales taxes are going up for business owners in Summit County.
For some, the pair of tax increases, totaling 0.45 percent, that the Summit County Council recently voted to implement over the next year means little change. Others — particularly lodging companies — worry that the rising taxes and speedy implementation could push customers away.
The first tax increase of 0.25 percent will help fund transportation initiatives in the county. It is expected to go into effect on Oct. 1. The other hike, of 0.20 percent, is scheduled to be implemented on July 1 of 2019.
The quick implementation of the tax increase this fall is one of the biggest concerns of lodging companies. Ron Neville, president of the Park City Area Lodging Association, said that many visitors, specifically large groups, book their reservations about one year in advance. Now, hotels are in a tight spot because they must go back to their customers and ask for more payment.
Rhonda Sideris, president and founder of Park City Lodging, said it is difficult to return to those who booked and tell them that the cost of the rooms has increased, especially since she already had a similar conversation with some of her customers when taxes in the county and state rose over the last couple years. She said one of her customers did not believe her when she told them the news of the most recent increase. "We had to go back to them a couple of times last year, and now we have to go back to them this year," she said. "I think it is really tough."
She appreciated the county's efforts to make everyone aware of the tax increase as soon as it was decided. Previously, the notifications about state and county taxes have come 90 days before implementation, she said.
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Part of the reason for the quick decision is because the county could miss out on funding if it waited to implement the tax, said Matt Leavitt, the county's finance officer.
The County Council considered its decision based on the size of the other counties opting in, and it determined that imposing the taxes would be beneficial to the county, said Janna Young, deputy county manager. Plus, she said, by opting for the tax increases, the county will be more likely to receive federal grants.
"If you are taking advantage of every opportunity that is available to you to fund projects and yet you are still coming up short, that moves you up the preference list of the federal government and their grant awards," Leavitt said.
Leavitt does not believe that previous sales taxes introduced by the county in 2017, which totaled 0.50 percent, affected visitation and spending, based on reports from the Park City Chamber/Bureau and the Sundance Institute. He predicts that this year's increase will not sway visitors either.
But Bill Malone, president and chief executive officer of the Chamber/Bureau, is wary of the change.
He said the tax increase could be problematic for properties booking large groups because oftentimes, one company or meeting planner is taking care of the expenses. When booking more than 100 rooms, the taxes add up quickly. He estimated that a group in 150 rooms paying $250 a night per room would pay a total of $4,700 a night in taxes.
"That is the type of number that leads a meeting planner to look at somewhere else," he said.
Plus, he said, the taxes could affect big ticket items, such as automobiles and appliances. He said the higher taxes might make businesses in Summit County less competitive compared to those in surrounding counties.
Teri Whitney, general manager of Snow Flower Property Management Company, said that she is concerned about the taxes. She said that she understands the need to improve mass transportation programs in order to get cars off the roads, but she felt like the decision was made too quickly and that it was an "easy, quick fix for funding."
Leavitt said that this was commonly heard from businesses as the county gathered feedback. Many times, they recognized that they benefit from good roads and infrastructure, but they worry that the amount of taxes imposed is too much.
"The pushback for me seemed like, 'Just watch it, because it keeps coming and coming. At a certain point, it has to be enough,'" Leavitt said.