Cape May to Raise Occupancy Tax for ’22

CAPE MAY – Just two weeks after hearing a presentation from its Municipal Taxation and Revenue Advisory Committee, Cape May’s governing body May 18 introduced an ordinance that would raise the municipal occupancy tax, from 2% to 3%, and extend that tax to rentals in the transient short-term rental space that utilize online apps, like Airbnb.
New Jersey’s occupancy tax statute allows municipalities to charge up to 3% to cover the cost of municipal services provided to accommodation establishments. For several years, that meant traditional hotels and motels.
Roughly a decade ago, things changed dramatically, with the introduction of online apps, like Airbnb, that allow property owners to engage in short-term rentals through online listings that bypass the use of real estate agents and are often hidden from municipal officials’ view.
The state amended its statutes to include transient space rentals, continuing to allow municipalities to participate up to the same 3%.
The option of imposing a municipal occupancy tax is not widely employed in Cape May County. Only Cape May and Middle Township opted in. With communities looking for additional sources of revenue, that could change. 
Stone Harbor Borough Council asked the borough’s administrator and chief financial officer to look at the possibilities of imposing the tax.
With over 180 municipalities in the state taking advantage of the option of a municipal occupancy tax, Cape May has long been one of only five that do not charge the full 3%.
The state collects its occupancy tax on transient accommodations, so a mechanism exists for municipalities to receive its share if the municipal tax is applied via an ordinance, like the one Cape May introduced.
A required public hearing on the ordinance is expected to take place in June before any vote to adopt.
Given the length of time an ordinance takes to implement, and the additional review required by state taxation officials, in Trenton, the ordinance would not take effect until Jan. 1, 2022.
To contact Vince Conti, email vconti@cmcherald.com.