Letter to the Editor: Reasons for Supporting an Increase of 2% in the Occupancy Tax

The right for any county or municipality in NC to levy any tax can only be authorized by an act of the legislature.

Basically, there are only two taxes which are available to all counties in NC – sales and property. Others, such as food and beverage taxes, land transfer taxes, and occupancy taxes must be authorized by acts of the legislature. House Bill 882 was ratified in 2006 giving Hyde County the ability to increase the current occupancy tax.

Why not have a food and beverage tax and/or a land transfer tax rather than increase the Occupancy tax? The General Assembly has not approved these in years due to the strong restaurant and real estate lobbies.  

What about the sales tax? Hyde can raise it .25% (one fourth of one cent). This could raise around $100,000 a year and not necessarily benefit Ocracoke.

The current occupancy tax of 3% is the lowest of any coastal county in N.C. (Indeed, I suspect it may be the lowest of any occupancy tax on the east coast.) 

Hyde is one of the 10 poorest counties in NC. Dare is one of the 10 richest counties. One thing the rich counties have in common is access to higher occupancy taxes, some have a food and beverage tax, and some have a land transfer tax. Dare has all of these revenue streams.
If we had been collecting the additional 2% tax when it was first authorized by the state in 2006, Ocracoke would have benefited by over 2 million dollars (revenue from the additional 2% is estimated to be in excess of $250,000 every year) – that is the firehall and the ballfield. 

Don't be fooled. Businesses only collect sales taxes and lodgings only collect the occupancy tax. They do not pay the tax.

While 2/3 of the 2% additional tax (approx. $160,000 after the administration fee) must be used to "promote tourism," 1/3 (approx. $80,000) can be used for "tourism related expenditures."  90% of the original 3% tax can be used for any purpose  for "the direct benefit of the island."  What this means is Ocracoke would have access to approximately $500,000 every year to benefit the island at no cost to over 800 island residents and taxpayers. This is $500,000 controlled by Ocracoke .

Given that Ocracoke's tax will not exceed adjacent counties, it is a poor argument to suggest that people will choose to not stay on Ocracoke. I doubt that anyone vacations on Ocracoke because of the lowest rate and I feel confident that Ocracoke has a lot more to offer than low occupancy tax rates.
How could the expenditure of $160,000 on promoting tourism benefit all businesses and specifically the lodging industry?   What has done the most to fill up motels and cottages during what was once a slow week? Thanks to the dedication and forward thinking of Gary Mitchell and David Tweedie the first weekend of June (Ocrafolk Festival) is now a virtual sellout for beds on Ocracoke. What if we had a paid promoter? How long can we expect people to volunteer their time and energy to organize events that fill the motel rooms and restaurant seats. Yes, the increase in occupancy tax can have a direct effect on motel occupancy during the "off season" if only we quit relying on volunteers. There is great potential in the Pirate Festival, Fig Festival, Oyster Roast, Blackbeard Play, Running Events, Fishing Tournaments, Arm wrestling and what creative ideas might be centered around the new ball field? It just needs someone with time to devote to these events.
No one stands to benefit more than the lodging industry. Just one more 3 day weekend with 100% occupancy will more than offset any perceived loss due to an increase in the occupancy tax.
Tourism is the economic engine for Ocracoke. As good hosts we should be obligated to provide 24/7 emergency services, public restrooms, trash disposal, fire and law enforcement protection, access to the waterfront and courteous and helpful assistance. Unfortunately, Hyde County's limited resources do not address many of the needs.

Money from the current occupancy tax has supported Hyde EMS, OVFD, Ocracoke Child Care, the Community Center, WOVV, Friends of the Library, the Ocracoke Community Park, OPS Museum, various events that attract visitors (Fourth of July, Ocrafolk Festival, Pirate Jamboree,  British Cemetery Ceremony……) Having the additional 2% would allow more support for these and other needs as what is now spent for marketing would come from it.

Look at the big picture. Let visitors know what the occupancy tax helps to provide.

Al and Linda  Scarborough                                                                                      February  2015


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