Occupancy-tax increase provides more revenue for Ocracoke’s tourism efforts
Published 5:29 pm Wednesday, April 4, 2018
Hyde County has two occupancy tax rates — one for the mainland and the other for Ocracoke Island.
The occupancy tax for Ocracoke Island increased from 3 percent to 5 percent on Jan. 1 of this year. That change will increase revenue from the tax by about $320,000 each fiscal year, according to a presentation Bill Rich, county manager, made last year. The former 3-percent tax generated about $480,000 each fiscal year.
The additional revenue will allow the Ocracoke Occupancy Tax Board to do more to promote and market Ocracoke as a tourist destination. After the county takes $9,600 for administrative costs, $310,400 is left to spend on tourism-related projects and programs. State law allows the county to receive a percentage of the occupancy-tax revenue to cover specific administrative costs.
The new Ocracoke occupancy-tax rate is expected to generate about $800,000 a year.
In his presentation, Rich noted that $157,500 distributed by the Ocracoke Occupancy Tax Board during fiscal year 2017 (which ended June 30, 2017) to specific groups could have been allocated elsewhere in the community. The following four entities shared that money:
- Ocracoke Civic and Business Association, $100,000;
- Ocracoke Foundation, $34,000;
- Ocracoke Alive, $12,000;
- Ocracoke Preservation Society.
The board appropriated $385,217 to 13 entities during that fiscal year.
In his presentation, Rich said the 2-percent increase allows the Ocracoke Civic and Business Association to serve as the tourism-development vehicle for Ocracoke Island and also provides its funding.
The 5-percent occupancy tax rate for the Ocracoke Island means the county collects $5 on every $100 spent on commercial lodging in the county. The county must spend 90 percent of the hotel-tax revenue generated on Ocracoke only for the direct benefit of Ocracoke. The same policy applies to occupancy-tax revenue generated on mainland Hyde County.
So, that means island visitors who pay for lodging are paying a total of 11.75 percent in taxes for each $100 they spend on lodging (5 percent occupancy tax and 6.75 percent in sales taxes). Some island lodging owners contend the 2-percent increase unfairly targets their industry. A fairer way to increase revenue would be to increase the sales tax, add a meals tax or increase the property tax to spread the burden to tourists and residents alike.
The Ocracoke Tourism Development Authority, by law, must spend two-thirds of the hotel-tax revenue it receives to promote travel and tourism. The other one-third may be spent on tourism-related expenditures. The Ocracoke Occupancy Tax Board is set to conduct its appropriations meeting on the 2018-2019 fiscal year at 7 p.m. April 10 at the Ocracoke Community Center.
The Hyde County budget for this fiscal year shows expenses for tourism-related purposes on Ocracoke Island at $385,217, with expenses for tourism-related purposes on the mainland at $8,000.