Eureka Springs CAPC considers path for adding retail tax collections

Members of the Eureka Springs City Advertising and Promotion Commission agree that revamping tourism tax collections to include retail businesses would provide a much-needed boost.

How to go about making that a reality, determining its legality, and getting input from all sides involved are crucial moving forward.

At their monthly workshop Wednesday, March 11, commissioners discussed the possibility of reinstating a 2 percent tax on customers of retail businesses in addition to the existing tax on lodging, bars and restaurants.

The idea, which has been spearheaded by commissioner and city council member David Avanzino, is aimed at generating more revenue for the CAPC to advertise and promote the city, as tourism-related tax revenue has decreased, especially in lodging numbers.

Commissioners analyzed various scenarios and the potential financial impact at the workshop, and decided to further consult with the CAPC’s attorney, the city’s legal counsel and the public before making a decision about the possibility of seeking to place a proposal on the ballot in November’s election. Any changes to the tourism tax must be approved by voters.

“Every indicator that we are seeing, whether it comes from our own staff, or the city, or the state, indicates that tourism dollars are going to decrease,” Avanzino said of the CAPC’s current collections of 3 percent from lodging, restaurants and bars.

Retail businesses, meanwhile, are seeing a significant uptick in business, commissioners said.

“It’s already happening with restaurants and lodging,” Avanzino said of the decrease in revenue from lodging, restaurants and bars. “My concern is that we are here and we are assigned the task of advertising for the entire city. That means all of our attractions, all of the retail shops, all of the restaurants, our bars, our hotels. Right now we are doing that, but only with the money that we get from restaurants, bars and lodging. … It only makes sense to me to bring back what we had years ago, which was the 2 percent for hotels, 2 percent for restaurants, and 2 for retail.”

CAPC director Mike Maloney said retail was included in tourism collections at one time, but that changed to the current format around 2007.

Avanzino, commission chair Shira Fouste and commissioner Robert Schmid all own lodging businesses in Eureka Springs. All three agreed business has taken a fairly significant hit in recent months.

“We do not have the business we had two years ago,” Avanzino said. “It has tanked.”

Maloney said a decrease in lodging businesses within city limits, combined with short-term lodging outside of city limits under platforms such as Airbnb, has contributed to the decline in tax collections.

Any change in the tourism tax structure has to start with CAPC approval before moving forward, commissioners discussed.

The key, Avanzino said, is somehow correcting the constant misconceptions of who pays the tourism tax.

The key moving forward is getting the public involved with a town-hall type session, getting input from residents and retail business owners, commissioners agreed.

That input will begin at 5 p.m., Wednesday, April 15, during the CAPC’s next scheduled workshop.