Municipalities in Wisconsin are very limited in the kinds of taxes they can levy. Every kind of tax is highly regulated by the state. That includes the room tax, which is placed on hotel rooms and other overnight stays in Wisconsin. The tax has become increasingly popular in communities throughout the state.
Over the last two decades, the number of communities with room taxes has more than doubled. But the way these communities are able to use these funds is limited. The Wisconsin Policy Forum recently analyzed these taxes in a report. In 2017, these taxes brought in $111.9 million for Wisconsin communities, but 70% of the funds need to be used on attracting more tourists.
"On one hand, it can be important and worthwhile for communities to make investments that draw tourists into their area — and it is also true that tourists do use local services," says Jason Stein, research director of the Forum and one of the authors on the report.