Each year, the Mississippi Legislature approves several tourism taxes for municipalities and counties that are levied on restaurants, hotels or both.
These taxes, in addition to the state’s 7 percent sales tax, are intended to be spent on parks, recreation and tourism-related projects in the city where they’re levied.
New taxes
Here are the two tourism taxes passed by the Legislature this session:
House Bill 1465 would allow the city of Mize to levy a 2 percent tax on restaurants that if approved by the voters would be repealed in 2025. The bill is due from Gov. Tate Reeves on April 16.
HB 1504 would allow the city of Forest to mandate a 2 percent tax on hotels and restaurants. If approved by voters, the tax would be repealed in 2025. The bill is due from the governor on April 19.
Reauthorized taxes
HB 1529 would allow the town of Como to reauthorize its $1 per hotel stay and 2 percent tax on restaurants. The tax will remain in effect until 2025 and it has already been signed into law by the governor.
In 2018, revenue from these local tourism taxes added up to more than $98 million. As of fiscal 2020, which ended June 30, revenues from these taxes added up to more than $106 million, an increase of 8.16 percent.
There are 92 of these taxes on the books, with 75 for municipalities and 17 of the state’s 82 counties levying one of these taxes.
Tourism taxes start as a local bill in the Legislature. These bills usually benefit a city or county in a legislator’s district and are one of the last chores the Legislature wraps up before leaving town at session’s end.
Once the local bill is passed, a referendum of local voters is required before the tax can go into effect. The tourism taxes usually have an expiration date of three or four years from passage.
The same rules that govern the passage of general and appropriation bills apply to the local bills. A three-fifths majority of both chambers are required to pass a new tax, which are pitched as temporary taxes by local leaders.
But they are often reauthorized by a new bill when they expire after three years without input from local voters.
Sometimes the tax expires without reauthorization and businesses continued to collect the tax. Four times in the last five years have lawmakers reauthorized the taxes and allowed the cities to retroactively collect revenue from an expired tax.
