New figures from the Rhode Island Department of Revenue show that the local meal and beverage tax produced $402,714 for the Town of Westerly in the first quarter of the current fiscal year, an increase of nearly $30,000, or 8 percent, compared with the same period in 2016.
The data is a direct measure of economic activity, as it is 1 percent of all taxable food and drink sales from July through September of 2017. Bars, restaurants and other businesses with such sales took in more than $40 million during the period, which includes the busiest months of the tourist season.
Similar reports on collections of the 1 percent local hotel tax, plus the town’s one-quarter share of the 5 percent state hotel tax, show that Westerly was credited for $337,880 in the first two months of fiscal 2018 (July and August of 2017), a little over $20,000 more than the same time last year. Again, the local tourism business is seasonal, and those were two of the peak months, accounting for a little less than $16 million in hotel, vacation home, and online room rental receipts.
The 1 percent hotel tax goes solely to the municipality where the hotel is located, while the 5 percent tax is divided among an assortment of cities, towns, state and regional tourism districts, the Rhode Island Commerce Corp., and the Providence Warwick Convention & Visitors Bureau.
On a year-over-year basis, the 1 percent hotel tax in August produced $82,178 for Westerly, an increase of 16.9 percent from August 2016. For both July and August of 2017, the most notable change was the 68.6 percent increase in taxes on online rooms plus Realtor and homeowner vacation home rentals; these totaled $15,286 in the two months, compared with $9,064 in the previous year.
The biggest effect of the hotel tax expansion, however, can be seen in Charlestown, with its abundance of vacation home rentals. In July and August of last year, the town was credited with $27,323 of revenue from Realtor-homeowner vacation home rentals subject to the 1 percent tax. For the same period of fiscal 2017, the total was $14,098, reflecting a gain of nearly 94 percent.
Charleston ranked fourth in the state in the vacation home business, trailing New Shoreham, which had $91,818 in revenue from the 1 percent tax, followed by Narragansett at $57,213, and Newport at $40,718.
Another striking aspect of these collections can be seen in Charlestown’s share of “hosting platform and room resellers” revenue, under the 1 percent state levy, which fell from $331 in the first two months of fiscal 2017 to $52 in July and August of 2017. Still, as the component breakdowns show, the extension of hotel taxes to online room resellers is producing comparatively little income for municipalites anywhere in the state: Newport, which leads in that category, received $16,266 from the 1 percent tax for July and August of 201, less than 4 percent of its total.
As for the meal and beverage tax, the Office of Revenue Analysis report shows a drop-off of 11.5 percent in September 2017 ($87,235), compared with September 2016 ($98,600). Charlestown was up 8.9 percent to $24,370; Hopkinton was a big gainer, up 119 percent to $5,472; and Richmond was down 12.7 percent to $11,238 in revenue from the 1 percent local tax.