The Town Council approves a resolution recently to investigate a proposal to boost the hotel tax up to 3 percent, a move that could generate millions of dollars in new revenues for #MiddletownRI.
MIDDLETOWN: BOOSTING HOTEL TAX COULD HELP BOTTOM LINE
MIDDLETOWN, R.I. (APRIL 28, 2025) – The Town of Middletown is always on the lookout for ways to generate new revenues.
And local leaders believe they might have found one that wouldn’t come out of the pockets of local taxpayers and could result in millions in fresh money for the community.
Briefing the Town Council on the idea recently, Town Administrator Shawn J. Brown said Middletown collects about $1.65 million annually under state law from the 1 percent in hotel taxes.
By boosting that figure to up 3 percent, Brown said Middletown stood to generate an estimated additional $3.3 million, funds he said could be dedicated to affordable housing, paying down the town’s debt, the General Fund or whatever the council decides.
Speaking with several colleagues across the state, Brown said there seemed to be support for submitting legislation to the General Assembly, which would need to sign off on the move.
“There’s been discussions over the past few years about trying to increase the amount of revenue we generate from the hotel tax…” Brown said. “What’s unique is the enabling legislation would give that authority to the Town Council, not relying on the General Assembly to make those assessments.”
As part of the motion adopted unanimously by the council, Brown and Town Solicitor Peter B. Regan were tasked with working with state legislators to craft enabling legislation to submit to the General Assembly. Brown and Regan were also asked to speak with other municipal leaders to generate support for the measure as well.
“It makes sense,” council President Paul M. Rodrigues said. “We’re always looking for additional revenue streams, especially when it comes to budget wise or capital (improvement) wise. This is important. This is a good start.”
Under state law, the current total tax rate on hotel rooms is 13 percent. That includes a 7 percent sales tax as well as a 6 percent hotel tax on all rooms. Of that 6 percent, 5 percent of that money goes to the state, with the remaining 1 percent to the host municipality.
The proposal discussed by the Middletown council would boost the 1 percent hotel tax up to 3 percent.
Councilor Charlie Roberts asked if the 2 percent figure was the maximum amount the town could ask to increase the hotel tax. When he was a member of the Middletown Affordable Housing Committee, Roberts said that volunteer board suggested a similar measure and dedicate the funds to the town’s efforts to boost existing home stock.
In response, Brown said based on what he’s heard, much more would be pushing it.
“I think at this time that seems to be the number that’s being discussed and that could be supported by the General Assembly,” Brown responded. “I don’t know if we could go much higher.”
From his perspective, Brown said it made sense for more hotel money to come back to the communities that host such operations.
“We as a community end up with the burden of having to pay for infrastructure, utilities and things like that, which partially have to be improved because we have these visitors to our community,” Brown said. “Having the money come back to Middletown (would help). We have more hotel rooms than most communities in the state of Rhode Island. It makes sense that we’d be able to generate that additional revenue to help.”
Document Link: https://mdl.town/NYCU-Hotel-Tax
About Middletown
The Town of Middletown is a vibrant municipality located on Aquidneck Island, known for its scenic beauty, historic landmarks, diverse economy and strong sense of community. For more information about all we have to offer, visit MiddletownRI.gov online.
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