Florida TaxWatch urges Legislature to leave tourist development taxes alone

Florida TaxWatch is urging the Legislature not to pass any hotel tax reform, arguing that the millions of dollars generated every year should be used to grow tourism, not to fix community-wide problems. 

The group released a new report as TaxWatch CEO Jeff Kottkamp prepared to speak at the International Drive Resort Area Chamber of Commerce meeting on Thursday. Members of the I-Drive Chamber include Disney, Universal, and other businesses that benefit from taxpayer-funded advertising.

Hotels and short-term rentals in Orange County add a 6% fee called the Tourist Development Tax (TDT). In February, this tax brought in $38.2 million as many tourists visited Orlando’s theme parks.

“To remain competitive and sustain Florida’s share of the U.S. tourism market, Florida must continue to invest in tourism marketing and promotion to make sure that when tourists begin to plan their next vacation, they think first of Florida,” TaxWatch said in the 18-page report called: “Tourism In Central Florida: Why Tourist Development Tax Revenue Should Not Be Diverted.”

“There have been multiple attempts in the past few years to repurpose tourism-related revenue sources for other sectors of the economy. Redirecting tourism revenue to other sectors will harm Florida’s tourism sector and can harm the economy overall.”

Kottkamp’s arguments are unlikely to convince several Democratic lawmakers. Local officials who oppose the current TDT rules say the money would be better used to improve SunRail, which does not run on weekends or at night, or to help provide affordable housing for tourism workers.

“We know that tourism is a huge economic driver in our region. … But we also have to acknowledge that tourists put a large strain on our resources in our community,” said Sen. Carlos Guillermo Smith, who has filed bills two years in a row to change TDT spending, during an event last year.

TaxWatch suggests one way to address the TDT debate is to let counties add an extra one-cent tax to pay for certain needs.

“Counties would have the discretion to levy an extra 1% if needed for infrastructure development,” the TaxWatch report said. “The funds would be limited to spending on tourism-related infrastructure improvements like downtown circulators30, resort beautification, improved utilities (e.g., water) and street lighting. A way to enforce this could be by requiring that the improvements be within a predefined tourism zone, for example, the I-Drive District.”

The report added, “Another possible solution is exempting Florida residents from additional levies. In FY 2023, Floridians accounted for 21% of the TDT collected. If counties are allowed to charge any additional levies, Florida residents could be exempt to those additional cents.”

International Drive is an 11-mile tourism area near Disney World that features 50 attractions, more than 140 hotels, and hundreds of restaurants.

People driving on Interstate 4 can spot the giant Wheel at Icon Park, which is part of I-Drive. The area also includes the Orange County Convention Center.