Hotel, restaurant taxes show gains for fiscal 2014
RESTAURANT AND HOTEL TAX COLLECTIONS increased in fiscal 2014 over 2013, according to the latest figures from the R.I. Department of Revenue, with the 1 percent meal and beverage tax and the 1 percent hotel tax yielding $22.3 million and $3.1 million, respectively, for the municipalities in which the taxes were collected.
PROVIDENCE – The fiscal year of 2014 showed an uptick in hospitality and tourism spending in the Ocean State, as collections for both the meal and beverage tax and both hotel taxes posted increases over fiscal 2013.
The 1 percent meal and beverage tax collected increased 4.6 percent on the year to $22.3 million, the first time that the amount was greater than $22 million, according to the R.I. Department of Revenue. The increase also marked the sixth consecutive year of a year-over-year increase, said Director of Revenue Rosemary Booth Gallogly.
Both the 5 percent and 1 percent hotel taxes increased 5.9 percent on a year-over-year basis. The 5 percent tax yielded $15.7 million for state agencies and municipalities, while the 1 percent tax pumped $3.1 million back to the municipalities in which the tax was collected. The breaching of the $3 million mark for a full year figure was a first since the state started issuing reports on the tax, said Gallogly.
Both 1 percent taxes also showed significant gains from May to June, according to the DOR. The meal and beverage tax collected grew 5.9 percent to $2.2 million in June, as the hotel tax saw a 23.3 percent increase to $334,022 in June over May. The month-to-month increases, while strong, fell short of the gains shown in May over April, which saw meal and beverage tax collections increase 16.7 percent as hotel tax collections grew 63 percent.
Rhode Island’s meal and beverage tax requires all restaurants in the state to charge a 1 percent local tax on the sale of all meals and beverages. Similarly, the local 1 percent hotel tax requires hotels to charge a 1 percent tax on all transactions. The 5 percent hotel tax is distributed to the state’s regional tourism districts, the Providence Warwick Convention & Visitors Bureau, the R.I. Convention Center Authority, the state of Rhode Island and the municipalities. Tax collections represent a fair gauge of restaurant and hotel activity in Rhode Island during a given period.
There were 13 towns and cities that received more than $500,000 in fiscal 2014 from the 1 percent meal and beverage tax. And of those municipalities, only Newport recorded a decline in tax revenue, falling 3.2 percent to $1.9 million. The largest percentage gain was recorded by Smithfield, at 11.7 percent to $649,927. Also showing a double-digit increase was Lincoln, at 10.5 percent to $752,037. The rest of the cities and towns showing increases in meal and beverage tax collected included: South Kingstown, 9.8 percent to $705,854; Pawtucket, 9 percent to $707,825; Middletown, 8.2 percent to $650,819; East Greenwich, 7.2 percent to $542,163; Warwick, 7 percent to $2.5 million; Westerly, 4.8 percent to $747,540; Cranston, 4.7 percent to $1.6 million; Narragansett, 4.7 percent to $523,958; East Providence, 4.2 percent to $850,141; and Providence, 4.1 percent to $4.7 million.
Of the six municipalities that collected more than $100,000 from the 1 percent hotel tax, Westerly saw the largest gain, 14.9 percent, ending the fiscal year with $188,057 in revenue. New Shoreham (Block Island) saw an 11.9 percent gain to $126,106, Middletown gained 11.7 percent to $289,889, Providence increased 5.5 percent to $825,596, Warwick showed a 4.1 percent increase to $432,937 and Newport hotel tax collections grew 3.2 percent to $815,986.
Similarly, the 5 percent hotel tax indicated improvements in hospitality activity during fiscal 2014 in all six municipalities that collected more than $100,000 from the levy. Westerly saw 14.9 percent growth to $235,071. New Shoreham’s 11.9 percent increase yielded $157,632. Other towns and cities with percentage gains and totals included: Middletown, 11.7 percent, $362,361; Providence, 6.6 percent, $789,101; Warwick, 4.1 percent, $541,171; Newport, 3.2 percent, $1 million.
The beneficiaries of the 5 percent tax included: regional tourism districts, with a 6.1 percent gain in fiscal 2014 to $6.4 million; towns and cities, with a 6.2 percent gain to $3.7 million; the state, 5.9 percent gain, $3.4 million, the Providence Warwick CVB, 5.7 percent growth and $2 million in tax revenue; and the Convention Center, with 2.1 percent growth to $291,472.