Snowmass Village’s sales tax rate is generally proper, but what steps to take if it rises because of hikes at the county or state levels need to be ironed out, officials said Monday.
The town’s total sales collection on retail, restaurants and lodging is 12.8 percent, giving Snowmass Village the third-highest rate in Colorado behind Winter Park and Mount Crested Butte, Town Council was told.
Finance director Marianne Rakowski said she queried six economists in the state to discern what, if any, impact increasing or decreasing sales tax has on consumer spending.
The experts all said that no studies have been done in this area, but one said he believes “that most travelers … are very familiar with tax rates above 10 percent and are probably unlikely to be using tax rates as a determinant in vacation planning or decision making,” Rakowski’s memo says.
Snowmass Village by itself levies a 2.5 percent tax on retail, restaurant and lodging sales that funds marketing efforts, and a separate 2.4 percent tax added to rental bills that goes toward bringing in group business.
The two rates have resulted in “a very healthy budget for both marketing and group sales compared to” other communities, said Russ Forrest, town manager.
But Councilman Fred Kucker said he didn’t believe the town’s tax rate was too high. He said he recently traveled to Las Vegas, where he got a receipt showing a 23 percent tax on his hotel room, including a resort fee and a tax on the resort fee itself. In San Francisco, he found a 15.6 percent tax rate.
“So I don’t think we’re in any great danger here,” he said.
Mayor Bill Boineau said he wondered how Snowmass Village will deal with a tax rate increase over which the town has no control. He said he has heard that the state is contemplating a sales tax hike to fund transportation projects.
“What’s going to happen to us … when we potentially start bumping our heads up against a 11, 11.5, 12 percent sales tax?” he asked. “What is that going to look like? Is that something this community should look at, and what do we have control over?”
Town Council can reduce the 2.5 and 2.4 percent tax rates without going to voters, town attorney John Dresser said.
If the town decided to temporarily reduce the marketing tax, for instance, how long the lower rate is in place is a crucial question, he said.
Whether reinstating it back to the original, voter-approved rate would have to go back to the ballot depends upon how long it was reduced, Dresser said. That is currently a question before the courts.
The town charter does not allow a citizen initiative or referendum to dictate the levy of taxes, Dresser said.
Reed Lewis, a Snowmass Village resident and businessman, said that needs to change.
“As somebody behind the register, and hearing people complain about [the tax rate] on a daily basis, I think we’re chasing money away,” he said. “If you’re not going to lower the rate, I ask you to change the code so we as the people can petition to lower the tax.”
But Hugh Templeman, the general manager of the Viceroy hotel, said reducing the marketing tax rate “would be tantamount to being asinine.”
Major companies grow their marketing needs as their business grows, he said. The goal should be to “develop a resort that brings more and more people, to the point that there is more and more businesses that will then bring more and more money, which will bring more and more people,” Templeman said. “That’s the entire process.”
Boineau said the issue will likely be brought up again this summer, including a discussion on possibly raising the $50 marketing tax rebate given to full-time residents.