Transient Occupancy Tax (TOT), also known as a tourism tax, bed tax, or hotel tax, is a tax levied on tourists in return for the use of local services and infrastructure. The tax is collected as a percentage on top of the cost for a hotel room, camping site, or other transient facility.
In tourist-based economies, Transient Occupancy Taxes often pay for essential services such as road maintenance, marketing, recreational programming, landscape architecture, and public safety. In Mammoth Lakes, CA, for example, revenue from TOT makes up more than 65% of the Town’s general fund and pays for public safety, snow removal, recreational facility maintenance, and much more.
In comparison, the city of San Diego, CA uses funds generated from TOT to promote arts and cultural institutions. According to the City’s 2011 Economic and Community Impact study, “The city used $5.8 million in funds from the Transient Occupancy Tax (TOT) to support 68 arts and cultural institutions, ranging from flagship institutions like the Old Globe Theatre to smaller organizations including the Veterans Memorial Center.” TOT also funded an additional 35 groups in the Commission for Arts and Culture’s Creative Communities San Diego program in the amount of $383,418.
Regardless of what communities use their TOT revenues for, collection and enforcement implementation remain the crux of the problem for small towns like Mammoth Lakes, CA. While most large hotels and rental agencies remit their taxes voluntarily, many second homeowners rent their properties without remitting crucial TOT to the Town. For a town that relies on TOT revenue, to provide the services that make it a year-round tourist destination for travelers world-wide, the implementation of a sustainable enforcement program remains it’s number one issue.
Currently, the Community Development Department of the Town of Mammoth Lakes, CA alongside urban planners and accountants in the Finance Department need to ensure the ongoing collection of TOT and hopefully an increase in revenues, since the Town curently faces Municipal Bankruptcy. The team has provided community members with information regarding the Transient Occupancy Tax collection efforts through newspaper and radio advertisements, internet marketing vi web-based GIS tools such as the TOT Property Search tool, and a TOT hotline for questions and complaints.
What other ways can tourist-based economies increase their revenues to ensure essential services for visitors and residents alike?
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