Palo Alto TOT Argument Against Measure B


Palo Alto currently imposes a 12% Transient Occupancy Tax (TOT) on guests in the hotels, motels and inns here. The tax was 10% and was increased just 7 years ago. Now, the City Council is proposing to increase the tax to 14%, which is 2% higher than surrounding cities.


Palo Alto hotel owners handle the TOT in two ways. Either they absorb the tax by lowering room rates or they add the tax to the regular room rate. If the hotel owner absorbs the tax, then its revenues are lower. If hotel owner adds the tax to the regular room rate, then fewer guests rent the room at the higher amount, causing lower occupancy rates and, you guessed it, lower revenues. In either case, the hotel owner loses. Lower revenue means that the hotel may have to lay off its workers. In addition, if the occupancy rate is lower, businesses that cater to hotel guests lose money.  


The City Council does not seem to understand that raising tax rates will not increase revenue to the city coffers. It will drive business and revenue out of the city. We wonder what would happen if the City Council lowered the tax? Perhaps it would collect more revenues?  


If you vote "NO" on Measure B, at least the 12% tax will remain the same as that in neighboring cities, such as Menlo Park and Palo Alto will be no worse off. (That's not saying much.)


A "NO" vote means more travelers spending more money in Palo Alto, which in turn creates more Palo Alto jobs.



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