The old myth that only property owners pay for city services has resurfaced with a new ordinance on the Provo City books.
The ordinance is an innkeepers tax, designed to make sure people passing through town pay their share for police and fire protection.The ordinance, which will charge a 1 percent fee to people staying in a hotel, motel or other rental for less than a month, is not yet in effect. The tax can be imposed in the future at the discretion of the Provo City Council.
Provo expects about $95,000 in revenue from the fee if it is activated.
You hear, now and then, that renters don't pay their fair share for schools and city services because they don't pay property taxes.
It is true the renter's name does not appear on the property tax bill. The renter does not send in the check that pays the bill and the renter doesn't get the tax deduction.
But the renter pays the bill.
I suppose there may be a philanthropic landlord who rents out housing for less than it costs, but let's not muddle the picture with the exceptions.
Hotels and motels are not tax-exempt. Their owners pay property taxes. It's safe to assume that the money to pay those taxes comes from the people who rent the rooms.
The property tax paid by innkeepers is roughly equivalent to the amount paid by other locally assessed businesses, said Utah County Assessor Ron Smith. Because residential property taxes are discounted 25 percent, businesses actually pay that much more in taxes.
The residential discount is also given to property owners who rent apartments that are occupied by year-round tenants.
Property tax is paid to the county, with 21 percent of the tax being returned to the city where the property is located, Smith said.
When a person rents a room at an inn in Utah County, he pays sales tax on the cost of the room. In Provo it is 6.25 percent. In addition, he pays a county transient-room tax, which is 3 percent in Utah County.
For a $50 room, the tax is $4.62. If the innkeeper is any kind of a businessman, a portion of the room rate pays the property tax.
The transient-room tax is added by counties at their discretion, said Viola Weyland, administrative officer for the Utah State Tax Commission. The tax is collected by the innkeeper with the sales tax and is forwarded to the State Tax Commission. The state then returns the transient-room tax to the county.
State law limits the transient-room tax to 3 percent, Weyland said. Utah County has assessed the full amount allowed by law since 1976.
Provo officials aren't too worried about the state law limiting the transient-room tax to 3 percent. As Provo Mayor Joe Jenkins said, the Provo tax is not in effect yet. The city only wants it on the books for sometime in the future when conditions may warrant adding the tax.
If Provo City can successfully transfer some of the cost of running the city to the people traveling through, Provo residents are not likely to complain. After all, Provo won't be the first to rely on outsiders to support the costs of government: New Jersey has managed to run its state government for years on revenues from people passing through the state by charging tolls on the New Jersey Turnpike.
But, the rationale for the tax can't be that travelers don't pay their share for city services. If they rent a room, they pay.
(Pat Birkedahl, Provo, is a staff writer in the Deseret News' Utah County bureau.)