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Raising Pennsylvania's hotel tax would be 'devastating' for Pittsburgh economy, officials say

Ben Schmitt
| Wednesday, Oct. 4, 2017, 1:42 p.m.
Patrons of the Wyndham Grand Pittsburgh Downtown stand at the window overlooking Point State Park on Sunday, Jan. 8, 2017.
Andrew Russell | Tribune-Review
Patrons of the Wyndham Grand Pittsburgh Downtown stand at the window overlooking Point State Park on Sunday, Jan. 8, 2017.

The head of the VisitPittsburgh tourism agency said a proposal to hike Pennsylvania's hotel tax rate would hurt the city and Allegheny County, especially efforts to attract large-scale conventions that pump millions of dollars into the local economy.

“This came out of nowhere for us,” VisitPittsburgh President and CEO Craig Davis said Wednesday. “Thankfully, this did not pass last night. We have mobilized all of our partners, and we are trying to get this defeated.”

The state's hotel tax rate would nearly double under a proposal that surfaced Tuesday in the House of Representatives to close the state government's $2.2 billion projected deficit. The increase would give Philadelphia and Pittsburgh the nation's two highest combined state-and-city hotel taxes, according to an analysis by HVS, a New York-based convention and hospitality industry consultant.

“It would make Pittsburgh by far the highest-taxed hotel city in our competitive set, cities like Cleveland, Columbus and Cincinnati,” Davis said. “I believe it would slow tourism in certain sectors. Conventions, when they look at competing cities, ask and do surveys on hotel rates. It would hurt our hotels.”

Allegheny County Executive Rich Fitzgerald agreed. He said a hotel tax increase could slow the region's burgeoning tourism industry.

“Anything that makes us uncompetitive would be devastating to our local tourism market,” he said. “We need a hotel tax that is in line with other cities we could compete with.”

Raising the state's hotel tax from 6 percent to 11 percent would put Pennsylvania in the top 10 states in hotel taxes, according to figures from the National Conference of State Legislatures.

Combined with local hotel taxes, a 5 percentage-point increase would give Philadelphia and Pittsburgh the nation's first- and second-highest hotel taxes, respectively, according to the HVS analysis. Philadelphia's combined state and city tax rate would rise to 20.5 percent from 15.5 percent, and Pittsburgh's, along with all of Allegheny County's, would rise to 19 percent from 14 percent.

“When you get that high — 19 percent — that makes us uncompetitive,” Fitzgerald said.

Fitzgerald said he understands the frustration in attempting to balance the state budget.

“But there are other ways to go,” Fitzgerald said.

Davis lobbied state lawmakers this year to pass legislation for a smaller hotel tax increase of by 1.25 percentage points. He said the increase could generate $1.4 million a year for the proposed Pittsburgh Sports Commission, along with $4.6 million annually for other initiatives.

Pittsburgh Mayor Bill Peduto said Wednesday that he's concerned the latest hotel tax proposal out of Harrisburg would kill the local effort for a lower increase.

“If they are looking at using a hotel tax to put a stopgap in their budget then we would like to see the assurance that the sports commission is still on the table,” Peduto said. “If that is in competition or potentially lost as a proposal to avoid what is a common-sense severance tax on gas that belongs to the public, then it will be hard for us to support it.”

Staff writer Bob Bauder and the Associated Press contributed. Ben Schmitt is a Tribune-Review staff writer. Reach him at 412-320-7991, or via Twitter at @Bencschmitt.

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