Local meals and rooms tax?

New Hampshire’s abundance of seaside beaches, lakes, and mountain resorts helps make tourism the state’s second-largest industry. While this influx of travelers is a boon to local businesses, it can strain municipal resources – like police and ambulances– during peak seasons. Some believe the answer is to allow towns to collect a local rooms and meals tax to help offset the cost of these extra services.

Meals and rooms tax in NH

The state government already collects a 9 percent levy on hotel rooms and restaurant bills. Revenue from this tax is returned to cities and towns based on their populations. This means that resort towns with small populations receive less money from the state despite making significant contributions to the state coffers during their busiest seasons. A local hospitality surcharge benefiting municipal services could help make up for this shortfall.

To learn more about meals and rooms tax in New Hampshire, see our issue page.

Town tourism taxes

There have been several efforts in the recent years, including SB 253 (2015) and HB 1214 (2016), to allow municipalities to authorize an additional tax on hotel room stays or restaurant meals. Though these efforts failed to make it into law, some small tourist towns are still actively lobbying for such a tax option to help pay for local services.

A good move for tourist towns

Proponents of giving towns the option to add a local rooms and meals surcharge think it is a fair way to ensure tourist dollars benefit local communities. They point out that a small fee added to a hotel room bill—perhaps only a dollar or two—would not place a financial burden on any one guest, but multiplied throughout the season could raise significant amounts of money for police and fire departments. This would be a way for the legislature to compensate tourist towns for their role in generating revenue for the entire state.

Potential pitfalls

Opponents of this idea feel there are better ways to help tourist areas pay for municipal services. Some suggest that rather than imposing an entirely new tax, it would be better to set aside a greater percentage of state rooms and meals revenue for communities that raise more of that money.

Opponents of a local hospitality surcharge also argue that, while the one more small fee may not seem significant, another tax will only serve to discourage tourism and make it more complicated for hotel owners and restaurateurs to run their businesses.

Weigh in

What do you think – Should NH towns be allowed to levy a local tax on rooms and meals to help pay for municipal services? Let us know what you think – yes or no, and why – by leaving a comment below.