Daily Post Editorial.
Palo Alto’s Measure E seems like a tax inspired by a Monty Python skit.
In one episode, a politician in a bowler hat says, “To improve the British economy, I’d tax all foreigners living abroad.”
And that’s what a hotel tax is, right? It will be paid by those visiting Palo Alto, largely corporations which book most of the 2,024 rooms in the city’s 27 hotels.
Measure E is the third hotel tax the council has put on the ballot since 2007. If approved, Measure E would raise the tax from 14% to 15.5% — a whopping 10% increase.
Cities across California have become addicted to hotel taxes. Consider your typical store. Say it charges a 9% sales tax. Only one 1% goes to the city. The rest to the county, transportation districts and the state.
But with a hotel, 14% of its revenues go directly to the city. That’s why cities like hotels so much.
Because of this, cities across the state have rolled out the red carpet to anyone interested in building a new hotel. That’s why you’re seeing so many hotels popping up everywhere.
Hotels represent 12% of Palo Alto’s general fund budget. If Measure E is approved, the city expects to bring in an additional $2.6 million a year.
But that might not happen.
Data collected by the city shows the hotel occupancy rate has begun to flatten out. In fact, it dropped from 78% last year to 77% this year, after several years of increases. Room rates have flattened out too.