Room Tax Repealed For Now

Given Muskego's proximity to Milwaukee and Waukesha and the city's growth potential, it is just a matter of time before a major hotel chain picks a site and sets up shop.

Until then, however, the Committee of the Whole (COW) on Feb. 8 voted to repeal the current room tax because it was negatively impacting two small business owners. A resolution will be drafted and sent to the common council as early as the Feb. 22 meeting.  

"We have small businesses suffering because of this tax, and we should really do something about it," Alderman Neil Borgman said. "A big hotel could be a long way off so the tax is not really necessary right now."

Originally adopted by the common council a few years ago, the room tax was put in place so city officials wouldn't have to scramble to adopt a tax when and if a large hotel comes to town. 

Instead, residents and entrepreneurs like Tom Sauer are having to play with the rates they charge guests to help cover the tax. Sauer owns a vacation rental home on Little Muskego Lake and said the room tax has been coming out of his pocket.

"We tried to raise our rates a bit to cover the tax," he told the COW. "But when our number of bookings went down, we lowered rates and have been paying the tax out of our pockets."

A small bed-and-breakfast on Muskego Dam Road is also being affected by the tax, but the owners were not present at the meeting.

Before the COW vote, the tax equaled 8 percent of the total bill. State statute dictated that 30 percent of the room tax collected would go to the general fund and 70 percent would be spent on tourism promotion and development.