Hotel Tax Becomes Law in Phila.

This article appeared in the Philadelphia Business Journal on July 11, 2008.

An added hotel tax of 1.5 percent in Philadelphia was approved by the state to promote tourism and pay for the expansion of the Pennsylvania Convention Center.

Gov. Ed Rendell signed a bill into law a bill that allows for the new tax.

"We strongly believe that marketing works. In the 10 years that funding has been available for marketing, the number of visitors has increased by nearly 5 million," Rendell said. "As competition for tourists and convention business becomes more aggressive, we cannot afford to have Philadelphia lag behind Baltimore; Washington, D.C.; and Boston, all of which spend more on marketing."

Still, the earliest the tax increase enacted would be September. City Council, on recess until September, must first draft and pass a bill approving the increase.

With the new tax, hotel guests will pay 15.5 percent in taxes. That breaks down to the existing state tax of 7 percent, city surcharge of 6 percent and county tax of 1 percent -- plus the additional 1.5 percent.

Of the potential 15.5 percent hotel tax, 8.5 percent of the proceeds would be used for tourism marketing.

The tax will also be used toward the $700 million expansion of the convention center, which is slated to open in late 2010 or early '11.