Questions raised over sales tax, hotel tax for businesses

Questions have been coming in about sales tax, hotel occupancy tax, how much, who gets it and how is it spent; the difficulty is that the answers vary according to location.

First, it's important to understand these are two different taxes. Statewide, sales tax is 6.25 percent and Hotel Occupancy Tax (HOT) is six percent.

The local level is where it gets complicated. In the case of Jasper, the city gets a portion of the sales tax toward building and maintaining the infrastructure.

According to a state website, "Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) may also impose sales and use tax up to two percent to a maximum combined rate of 8.25 percent."

In the city of Jasper, the maximum two percent is charged, of which the city gets 1.75 and the rest goes to JEDCO (Jasper Economic Development Corporation) and ad valorem taxes.

HOT, the so-called hotel tax is a different rate and different rules.

In the city of Jasper, the HOT rate for sleeping accommodations, meeting rooms and banquet rooms is 13 percent. The state gets six and the city gets seven percent.

That sizeable seven percent (more than $200,000 last year) used to be administered by the Jasper/Lake Sam Rayburn Area Chamber of Commerce, but the city of Jasper decided more than a year ago they would do it themselves.

State law allows them to do that, but there are strict rules to how the HOT money can be spent. It's spelled out in section 351.101 of the tax code: revenue from the municipal hotel occupancy tax may be used only to promote tourism and the convention and hotel industry.

A long list (and many opinions from the state attorney general) further defines what that can or cannot include. It can include the $15,000 the city budgets for salary. Residents can view a copy of the budget at City Hall.

The tax code does say revenue derived from this tax shall be expended to directly enhance and promote tourism, and not be used for the general revenue purposes or general governmental operations.