A bill passed by a committee in the Iowa House Tuesday would let cities and counties raise their hotel motel tax from the current limit of 7% up to 9%. The higher tax would be levied only after being approved by local voters. Representative Jeff Kauffman, a Republican from Muscatine, is opposed to the measure.
He argued with Cedar Rapids Democrat Tyler Olson during debate in the House Ways and Means Committee. Kauffman says it would be mostly Iowans paying the higher tax, not travelers from out of state.
“If 70% of the people that stay in Iowa hotels and motels are Iowans, is it fair to say this is a potential tax increase and 70% of this tax increase will fall upon Iowans?” Kauffman asked Olson. “Without agreeing with that number, whoever is going to stay at the hotel would pay an extra penny or two,” Olson said.
The 70% estimate comes from the trade group the Iowa Lodging Association, which strongly opposes the bill. Kauffman also believes the tax would fall more heavily on rural Iowans. “I doubt a lot of Des Moines folks are staying in Des Moines hotels, but there are a lot of Cedar County folk and southern Iowa folk are staying there,” Kauffman said. “I’m going to tentatively disagree with you,” Olson said. “I don’t have a geographic breakdown.”
The City of Cedar Rapids, Linn County and the Iowa Association of Counties support the higher tax, which could only be spent on tourism. The proposal is included in a budget bill. It’s expected to go before the full House later this week.
