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San Francisco County, CA November 2, 2010 Election
Proposition J
Hotel Tax Clarification and Temporary Increase
County of San Francisco

Ordinance - Majority Approval Required

Fail: 116313 / 45.52% Yes votes ...... 139206 / 54.48% No votes

See Also: Index of all Propositions

Information shown below: Summary | Fiscal Impact | Arguments |

Shall the City increase the hotel tax rate from 14% to 16% for the next three years, confirm that anyone collecting rent from a hotel guest must also collect tax on room rental and related charges, and define "permanent resident" so that only an individual could qualify for the "permanent resident" exemption?

Summary Prepared by The Ballot Simplification Committee:
The Way It Is Now: The City charges a 14% tax on the rental of hotel rooms and related charges, and that money goes to the General Fund. In addition, a fee of 1% to 1% for improving Moscone Convention Center and promoting San Francisco is assessed.

The hotel tax applies to the amount a guest pays to occupy a room and related charges, and the hotel "operator" must collect the tax when it collects the payment. The hotel tax does not apply to payment from a "permanent resident" who occupies a hotel room for at least 30 consecutive days. The Tax Code defines "operator" and "permanent resident." (See the legal text of the measure.)

The Proposal: Proposition J would increase the hotel tax rate from 14% to 16%. This increase would be in effect from January 1, 2011, until January 1, 2014. Money collected from the increase would go to the General Fund and the City could use it for any public purpose.

Proposition J would confirm that the hotel tax applies to the amount a guest pays to occupy a room and related charges, and that anyone collecting payment from a hotel guest must collect the tax on that amount and pay it to the City.

Proposition J would define "permanent resident" so that only an individual could qualify for the "permanent resident" exemption.

Fiscal Impact from The Controller of San Francisco:
City Controller Ben Rosenfield has issued the following statement on the fiscal impact of Proposition J:

Should the proposed ordinance be approved by the voters, in my opinion, it would generate additional tax revenue for the City of approximately $38.0 million annually that can be used for any public purpose.

The ordinance would add 2% to the surcharge on the City's hotel tax rate thereby increasing the overall hotel tax rate from the current 14% to 16%. The increased surcharge would be in effect for a three year period from January 1, 2011 to January 1, 2014. After January 2014 the overall tax rate would return to 14%. This change would result in an estimated $26.0 million in new revenues on an annual basis beginning in 2011.

The ordinance would specify that the City's hotel tax applies to any entity collecting room rental charges from a hotel guest, specify that only individuals can qualify for the `permanent resident' exemption to the hotel tax, and make other clarifications. These clarifications would result in approximately $12.0 million annually in new revenues.

 
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Arguments For Proposition J Arguments Against Proposition J
San Franciscans who ride MUNI, send children to public school, or use city streets and parks have already been hurt by the huge budget deficits caused by our deep recession.

We aren't the only ones. Each year, five million tourists visit San Francisco. These visitors rely on the same services we do: MUNI, police and fire protection, trash collection, even health care.

Proposition J is a fair solution that will help fund these vital services but won't cost San Franciscans a penny. It was placed on the ballot through a community petition drive that collected signatures from 15,000 San Francisco voters.

YES on J creates a temporary 2% surcharge on the cost of hotel rooms that will expire in four years. The average visitor would pay an extra $3 per night.

YES on J also closes loopholes that certain internet hotel booking companies and large airlines are using to avoid paying their full share of the hotel tax.

Currently, visitors to San Francisco pay the same or lower hotel tax than they do in New York, Los Angeles and Boston. Our hotel tax has not increased in 14 years while costs have skyrocketed.

The large hotel owners oppose Proposition J. They have placed a "poison pill" on the ballot + Proposition K + which will kill Proposition J.

Don't be fooled! Proposition J is supported by a diverse coalition that includes the San Francisco Democratic Party, teachers, nurses, city employees and health care advocates. REMEMBER + IT TAKES TWO VOTES TO SAVE VITAL SERVICES: YES on J, NO on K!

Martha Hawthorne, Public Health Nurse*

Claire Merced, Public School Teacher

Maritza Di Cicco, Coleman Action Fund for Children

Supervisor Eric Mar

California Nurses Association

United Educators of San Francisco

Sierra Club

  • For identification purposes only; author is signing as an individual and not on behalf of an organization.

Rebuttal to Arguments For
We will pay for Proposition J in lost wages, benefits, and jobs.

Fact: The 2 point increase in the hotel tax is projected to eliminate more than 2,000 jobs and $75 million in wages.

Fact: Supporters of Prop J say we haven't increased our hotel tax in 14 years. But since 2009, hotels have paid an additional $8 million per year to the City's general fund. Based on a self-assessment paid by all San Francisco hotels, and ratified by the Board of Supervisors, a fee of 1% to 1.5% is added to all hotel room bills. This fee effectively raises our hotel tax to 15% -15.5%. With the additional increase from Proposition J, San Francisco will have the highest hotel tax in the Nation.

Fact: When New York City increased its hotel tax to a similar amount, convention business plummeted, costing the city millions of dollars. New York City was forced to repeal the increase.

We are small business leaders, local merchant associations, neighborhood shopkeepers, and restaurateurs and we join the Mayor in opposing Proposition J because it will hurt our small businesses and cost local jobs.

Please join us and VOTE NO ON PROPOSITION J.

Mayor Gavin Newsom

Joe D'Alessandro, President & CEO, San Francisco Convention and Visitors Bureau

Small Business Advocates

San Francisco Council of District Merchants

San Francisco Small Business Network

Proposition J is a job-killing tax that will harm the tourism industry.

Proposition J is a poorly-timed and irresponsible measure that will harm some of San Francisco's most important economic pillars - tourism, conventions, and the visitor services industry.

Unlike Proposition K, Proposition J raises taxes. Tens of thousands of local residents are directly employed by large, mid-sized, and small companies that serve the many visitors our City greets each year. The ripple effect of this economic activity touches every City neighborhood. Proponents argue that the tax only affects out-of-towners but this tax increase would hurt local jobs, local business, and local residents.

Increasing the effective rate of Hotel Tax from 15%-15.5% to 17%-17.5% will give San Francisco the highest level of hotel taxes in the country, discourage casual visitors, inhibit regular business travelers, and scare off large conventions that drive our economy. This increase prices San Francisco out of the regional convention market and sends millions of dollars of business to rival cities up and down the West Coast.

This proposed tax increase would give San Francisco the dubious honor of having the highest level of hotel taxes in the county - even higher than New York City! When NYC raised its hotel taxes too high, the impact on the economy was so strong that the tax was repealed less than two years later.

When we balanced the budget this year, we avoided taxes that would hurt our local economy. Now, special interest groups have seized the initiative process and are recklessly threatening local jobs, local tax revenues, and our City's economic future.

Proposition J is the wrong choice in this economy. Please join us in voting NO on Proposition J.

Mayor Gavin Newsom

Joe D'Alessandro, President & CEO, San Francisco Convention and Visitors Bureau

Rebuttal to Arguments Against
Close the loopholes and save vital services by voting Yes on J and No on K.

We all agree on closing loopholes used by hotel internet booking companies and the airline industry. Shouldn't hotels also be required to do their fair share? Yes on J is hotel fairness.

5 million tourists come to San Francisco every year. We are + and always will be + the most attractive city in America. Most visitors will tell you: a temporary surcharge of $3 per night is a bargain if it helps fund a more reliable Muni, ensures that homeless services are available, and keeps city streets clean and safe.

Not a shred of evidence on the economy.

Fourteen years ago was the last time the hotel tax was raised in San Francisco. Afterwards, tourism climbed more than ever. And hotel owners just jacked up their own charges 1.5% without hurting the tourist industry. Visitors use city services, too.

San Franciscans have endured cuts in schools, Muni, safety and health care. City employees have taken a voluntary $250 million pay cut.

Shouldn't the 5 million visitors to San Francisco pay their fair share of rising costs? It takes two votes to save vital services.

Please join us and vote Yes on J and No on K.

Martha Hawthorne, Public Health Nurse*

Claire Merced, Public School Teacher

Maritza Di Cicco, Coleman Action Fund for Children

Assemblyman Tom Ammiano

Board of Supervisors President David Chiu

California Nurses Association

United Educators of San Francisco

Sierra Club

  • For identification purposes only; author is signing as an individual and not on behalf of an organization


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