Coppinger brings hotels into sales tax debate

Coppinger brings hotels into sales tax debate

March 27th, 2011 by Dan Whisenhunt in News

Facing the near certainty of losing millions of dollars when a sales tax agreement with Chattanooga expires in May, Hamilton County Mayor Jim Coppinger lately has touted the county's hotel-motel tax as a benefit from the county to the city.

In public speeches and forums, Coppinger has said the 4 percent tax - which raised $4.4 million last year - is all spent on promoting tourism in Chattanooga. He said it's an example of the county doing the right thing.

"We could go East Ridge and Soddy-Daisy to recruit softball tournaments," Coppinger said. "We could do that in other municipalities [instead of Chattanooga].

"That's the only thing we're saying about the sales tax agreement," Coppinger said. "[Keeping it] is the right thing to do."

But Coppinger's argument leaves Chattanooga Mayor Ron Littlefield scratching his head.

"The sales tax agreement is expiring, and it really has nothing to do with the hotel-motel tax," Littlefield said.

He wants to negotiate a completely new sales tax agreement rather than renew the old one.

The only way the hotel-motel tax is similar to the sales tax agreement is that most of the money for both comes from Chattanooga, city leaders say. If it weren't for the city's hotels and motels bringing in the tax money, the county wouldn't have any money to give, they say.

The city and county each levy a 4 percent tax on hotel rooms. East Ridge has its own 2 percent tax.

Chattanooga uses its hotel-motel revenue to pay off debt on the 21st Century Waterfront and to repair and maintain the attraction, said Littlefield spokesman Richard Beeland and city Finance Officer Daisy Madison.

The county gives more than $4 million in hotel-motel tax funds to the Chattanooga Area Convention and Visitors Bureau each year to promote tourism.

Bob Doak, president and CEO of the Convention and Visitors Bureau, said $3.2 million is spent promoting tourism and the rest goes to the Chattanooga Convention Center, Finley Stadium and the Chattanooga Sports Committee. Doak estimates tourism generated an estimated $19 million in sales taxes countywide in 2010.

Littlefield and Beeland counter that 90 percent of that money is collected from Chattanooga hotels.

"It's essentially a pass-through," Littlefield said. "It could have easily just have been collected by the city and given to the Convention and Visitors Bureau."