Saving Cape May Tourist Millions

Governor Christie could be saving Cape May tourists millions of dollars. When he visited Cape May this time last year and Cape May residents were waiting with great anticipation.  The website CapeMay.com  captured the day beautifully in pictures.

We  survived Sandy relatively unscathed and the city was on the cusp of another successful tourism season.  The Governor was coming to celebrate that success with Cape May officials, residents and visitors.

After all, those visitors contributed $1,144,440.00 in hotel occupancy tax in 2013. That number represents 2% of room rates charged in every hotel, motel and B&B in Cape May. Let that number settle in.

Now add to that number an additional 5% of room rate paid by the Cape May tourist into the State of New Jersey tourism tax fund. That is on top of the 7% sales tax already charged. Using a little algebra, we can calculate that $57,222,000.00 was the base room revenue. Tourists then contributed $2,861,000.00 to state tourism tax and $4,005,540.00 in general fund sales tax. Just on hotel rooms.

These numbers only reflect the contributions of Cape May visitors. Expand this formula across the state and you begin to see them grow.

Now look at the number of tax dollars collected by whole house rentals in Cape May in 2013: $0.00. That’s right zero dollars collected. ZERO.

Most of what has been written on this issue relates to the effect on the business owner of the lodging establishments and the negative impact the occupancy tax levies. Certainly there is an uneven playing field in the housing of out-of-town visitors in Cape May. The argument that whole house rentals don’t provide the same services as hotels, motels, or B&B’s is irrelevant to the tax issue. Visitors in whole house rentals place as much burden on city services, and contribute nothing in terms of sales tax or tourism tax.

Tourism taxes were created by Governor James McGreevey in 2003. Originally intended as a vehicle to fund cultural agencies and the arts, that hasn’t been the case in the past few years. Much of the collected tax finds its way into the general fund.

When Governor Christie visited last year, in a conversation over a handshake, he agreed to visit this issue after the elections were over. One can only wonder what other priorities got in the way.  The Governor has always been a fan of level playing fields. He is also not a fan of new taxes.

Collecting sales tax from whole house and condominium rentals provides a way of keeping revenue to the state neutral while giving the tourist in hotel, motel and  B&B’s relief from the extra 7% they currently pay.

According to research done by attorney Mark Miller, a 2008 lawsuit by a hotel motel association estimated that the State of New Jersey could gain $345 million if condos and whole houses collected sales taxes similar to the lodging industry.  Let that number sink in.

Governor Christie has never walked away from a confrontation. I respect him for his style. The real estate lobby would certainly not allow taxing whole houses without a confrontation.

It’s time, though, to stop financing parts of New Jersey or Cape May on a smaller scale on the backs of the tourists that visit our towns. At least we can treat them fairly across the board, share the burden, and level the playing field.

What say the tourists?