Dear Senator Hinchey & Assemblymember Shrestha,

 

We represent a coalition of hotel owners, short-term rental operators, and local businesses that would be directly and adversely impacted by the introduction of an additional City of Kingston occupancy tax. The proposed tax of up to 3% would be layered on top of the existing New York State sales tax of 8% and the Ulster County occupancy tax of 4%, bringing the total tax burden on lodging to a materially higher level than many competing destinations.

 

This proposal has moved forward despite opposition from the hotel owners located within the City of Kingston, those most directly affected. However, the impact extends well beyond hotels. Short-term rental operators, restaurants, retail establishments, and service-based businesses all depend on visitor-driven spending. Policies that dampen visitation will have second-order effects across the broader local economy.

 

From a policy standpoint, the absence of a formal economic impact analysis, meaningful outreach and communication to those affected, and an informed discussion of unintended consequences is concerning. Without this, it is difficult to assess whether projected revenues are realistic or whether the policy may instead result in reduced occupancy, shorter stays, or displacement of visitors to nearby jurisdictions. Major economic policy changes should follow a transparent, data-informed process with meaningful stakeholder input.

 

Occupancy taxes are not economically neutral. They directly influence consumer behavior through price sensitivity and substitution effects. Travelers, particularly group, event-based, and budget-conscious segments, evaluate total trip cost when selecting destinations. Even modest increases in effective tax rates can shift demand to nearby alternatives offering comparable experiences at lower total cost. In Kingston’s case, this creates a clear risk of fiscal leakage, where visitors choose to stay just outside city limits while still utilizing city amenities, thereby reducing the intended tax base.

 

Moreover, the tax burden does not fall solely on the visitor. Empirical research shows that lodging operators often absorb a portion of occupancy taxes through reduced pricing power, lower margins, or decreased occupancy. This burden falls disproportionately on small, independent operators and short-term rental hosts—precisely the businesses that define Kingston’s character and lack the scale advantages of national hotel chains.

At the same time, local operators are already facing significant cost pressures. Property taxes have increased 8.9% in 2025 and an additional 9.9% in 2026. Insurance premiums, utilities, debt service, payroll, and regulatory compliance costs continue to rise. In this environment, an additional tax is not a simple pass-through; it compounds existing financial strain and heightens operational risk.

 

This raises a broader policy concern regarding sector-specific taxation. Lodging is increasingly treated as a high-yield tax category, similar in structure to excise-based “sin taxes,” such as alcohol, cigarettes, and cannabis. However, visitors come to Kingston for positive experiences, family gatherings, celebrations, tourism and recreations.  Travel contributes to mental well-being and is a net economic driver that supports employment, small businesses, and municipal revenues across multiple sectors. Disincentivizing visitation undermines that ecosystem and may ultimately be counterproductive to long-term fiscal stability.

 

We are now seeing multiple municipalities such as Hudson, Rhinebeck, and Kingston, pursing separate occupancy tax policies independently. That is not a series of isolated decisions; it is the emergence of a fragmented regional tax structure. If each municipality adopts its own occupancy tax in isolation, we create a domino effect where neighboring towns feel compelled to follow; not based on data, but to avoid competitive disadvantage.

 

This is precisely the type of situation where the State’s role is critical to ensure that policies with regional economic implications are approached in a coordinated, data-driven manner rather than through incremental, municipality-by-municipality decisions.

 

We respectfully urge you to approach this home rule request with caution and to require a more comprehensive data-driven justification before granting approval which will better serve both local communities and the broader New York State economy.

 

Thank you for your time and consideration.