Palo Alto Measure B would increase the city's transient occupancy tax, the tax added to hotel bills for visitors, from 12 percent to 14 percent.
The increased revenue, estimated to be more than $2 million a year, would go into the city's general fund, but in placing the proposal on the ballot the City Council has made clear the money will be allocated to addressing infrastructure needs, including seismic upgrades to fire stations and other street and parking improvements. It is an important piece to a broader strategy of funding infrastructure improvements.
Opposition has come from the Chamber of Commerce and the hotels whose guests will have to absorb the additional 2 percent tax. They argue the increase will put Palo Alto hotels at a competitive disadvantage to those in other cities where the tax is less, and question the rationale of using these tax revenues to fund infrastructure projects.
The tax increase, which only requires a simple majority vote, is a politically easy way to generate an additional couple of million dollars a year. Two percent of a $200 hotel room amounts to an additional $4, surely not enough to change any visitors' decision on where to book a hotel room.
While not the optimal way to fund needed city services, it has become a convenient strategy for cities as a way to avoid the two-thirds approval requirements for raising the property tax under Prop. 13 or passing a bond measure.
Vote "yes" on Measure B.