Legislation Would Restrict County Taxing Authority

January 18, 2022

HB 75 (Ware) would place restrictions on the additional taxing authority granted to counties in 2020.  VACo opposes this legislation.

The bill would generally place a cap of 5 percent on transient occupancy taxes imposed by counties and require revenues from rates between 2 and 5 percent to be dedicated to tourism.  Under the 2020 legislation, unless previously authorized for some other purpose, county transient occupancy tax revenues from rates between 2 and 5 percent are to be dedicated for tourism, but revenues from rates above 5 percent may be used for general purposes.  The bill also caps meals taxes imposed by counties at 2 percent, with rates up to 4 percent allowed if approved in a referendum.  Under the 2020 legislation, meals taxes are allowed at up to 6 percent, with no referendum requirement.  (HB 75 also reinstates earlier Code language that restricts a meals tax referendum that fails from being placed on the ballot by resolution of the board of supervisors within three years of the referendum’s failure.)

HB 75 has been referred to the House Finance Committee.  Please contact your legislators to oppose this legislation.

Key Points

  • The 2020 legislation recognized that counties bear similar responsibilities to those of cities, and that counties need similar options for revenue diversification to generate the necessary funds to provide these services. This legislation retreats from the progress that was made in 2020.
  • Counties have recognized the stresses placed on the hospitality industry during the pandemic and have developed a variety of creative approaches to assist local hotels and restaurants, including the use of federal relief funds to provide grants, regulatory flexibility and grant funding to assist with outdoor dining, and restaurant gift card promotion programs, among other efforts.

VACo Contact:  Katie Boyle

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