The admissions tax approved by City Council will impact businesses large and small that depend out-of-town visitors to continue spending.
The bulk of the $1.1 million raised by the new tax will come from one source: Colonial Williamsburg, even as the living history foundation struggles to restructure after close to a decade of declining visitorship.
The admissions tax approved by council Aug. 10 goes into effect July 1, 2018. It is a part of a series of changes the city's leaders hope will infuse money into the city coffers, which in turn will be used for tourism-related projects.
Despite approving the admissions tax, the city does not have a definitive list of businesses that will be impacted by the new tax.
"The finance department has to do an analysis of the business licenses held by the Commissioner of Revenue's Office to determine what specific businesses exist in the City which would be subject to the tax," assistant city manager Andrew Trivette said. "We have not created a list of examples at this point, prior to that analysis."
The city has identified some businesses that would be affected because they charge for admission, like Movie Tavern and Colonial Williamsburg.
Other businesses are still trying to determine whether they will be forced to pay the new tax.
Lance Zaal is a co-owner of Drink Williamsburg, which provides tours to breweries, meaderies, and distilleries in the Greater Williamsburg area. The companies involved in those tours are both in Williamsburg and James City County. Zaal emailed city staff to see if his business would be affected by the tax on June 13.
"Yes, tours in the city would be subject to the tax," Trivette wrote to Zaal in a June 14 email. "Despite their mobile nature, they are an activity for amusement lecure, tax, or performance that requires a fee for entry or participation and therefore would be required to collect the admissions tax."
The city's proposed ordinance says an admissions tax would be levied on "circuses, carnivals, menageries, moving picture shows, fairs, shows and exhibitions of all kinds." The list also includes public performances, such as lectures, concerts and other similar amusements.
Some institutions and charity events will not need to pay the new tax. Events put on by the College of William and Mary and other school-sponsored events are also exempt.
One significant source
The city's largest tourist attraction, Colonial Williamsburg, will provide more than half of the revenue created by the admissions tax, according to publicly available information about the foundation that operates the 300-acre living history museum.
The foundation collected close to $19.1 million from admissions during its 2015 fiscal year, according to IRS documents. The 3.5 percent admissions tax force Colonial Williamsburg to either increase prices or cut $660,000 from its revenue.
Colonial Williamsburg president Mitchell Reiss told ccouncil in June that the organization fears pushing its customer base away with what will be another price increase.
"Promoting tourism in a goal we all share, but raising taxes on tourists to do it just doesn't make sense," said Reiss in a prepared statement. "This will penalize both our local residents and our visitors, many of whom are seniors living on fixed incomes, and working families already stretching to make ends meet."
Colonial Williamsburg saw its number of paid visitors drop about 10 percent in the past decade, according to tax records and the foundation's annual reports.
"Tourism and hospitality are the city's primary economic engine and job-creator. This tax risks driving away the business that we as a region work so hard to sustain, and in doing so will undercut its own revenue," said Colonial Williamsburg spokesman Joe Straw in a preapred statement. "For Colonial Williamsburg in particular, a significant tax increase on our guests is of critical concern as we deal with serious financial challenges."
Push for change
Creating the admissions tax was among a raft of changes approved in early August.
Meal and room taxes were increased from 5 percent to 6.5 percent and 7 percent, respectively.
Council is also considering whether to increase the room tax rate from 7 percent to 8 percent.
All of the changes are effective in July 2018, and they are expected to raise $3.4 million in their first full fiscal year.
New revenue from the taxes will be placed in a tourism development fund that will be used to spur private tourism-related investment in projects that the city could also help finance.
Council members originally considered adding a 7 percent admissions tax. They lowered the rate of the new tax after hearing concerns from members of the community.
"We think that may be less harmful to the community," said Greater Williamsburg Chamber and Tourism Alliance president Karen Riordan in a July 8 meeting.
On Friday, Alex Jones stood in Colonial Wiliamsburg with his mother. The pair visiting from Richmond said a price increase wouldn't necessarily make them second-guess trips to Williamsburg.
"I don't think it would matter," he said. "I can't say it would deter me. I'd probably pay it."
Jones said he sees value in Colonial Williamsburg beyond what he is paying for admission.
"I've been coming here since I was a kid," he said. "There's definitely a reverence for history here, which I appreciate. It's definitely a time capsule of sorts."
Gina DeAngelis, a Williamsburg resident since 1998, told mayor Paul Freiling via email that charging more for the city's strongest tourism attraction would be a mistake.
"(Colonial Williamsburg) is fighting to keep its doors open, laying off dozens of people every few months, struggling for every dollar from tourism that's being drawn away to other businesses and 'projects' like the invisible ones you haven't proposed yet — and you want to increase the cost of visitors' coming to CW," she wrote on June 23.
Ripley's Believe It or Not, along Richmond Road, will also pay the admissions tax.
"I see the potential benefits, however, that's a big tax to put on the chosen few," wrote Ripley's owner Bill Thompson in a June 9 email to city manager Marvin Collins.
Bill Scruggs, co-owner of the Fife and Drum Inn, said he appreciates the city giving itself time to iron out the nuances of the admissions tax will implementing it.
"I'm sure the city will be in touch with those businesses," he said of the ones who will need to pay the admissions tax. "It's one of the reasons these changes don't go into effect until July. There's quite a bit of work involved in telling businesses not only how to collect the tax, but also how to submit it."
Wright can be reached by phone at 757-345-2343.
Tourism development fund