August 9, 2002
Dear Community Development Coordinator:
You have the following question: What does the city need to do in order to implement a
hotel-motel tax?
The answer is pass an ordinance as authorized by Tennessee Code Annotated, ' 67-41401.
Your City is a home rule municipality. Under Article XI, ' 9, of the Tennessee
Constitution, home rule municipalities cannot levy taxes except those authorized by general law.
Tennessee Code Annotated, ' 67-4-1401 et seq. is such a law. It authorizes “each municipality
in the state” to levy a hotel-motel tax, but defines “Municipality” as “an incorporated city which
has adopted home rule in accordance with the Constitution of Tennessee, article XI, ' 9.”
Tennessee Code Annotated, ' 67-4-1402 provides that the tax shall not exceed 5%, and provides
for the approval of the tax by ordinance passed by a 2/3 vote of the municipal legislative body at
two consecutive regularly scheduled meetings.
The same statute also provides for a referendum on the hotel-motel tax upon the filing of
a petition by 10% of the qualified voters who voted in the municipality in the last gubernatorial
election.
In other words, the City does not need a private act to levy a hotel-motel tax. It already
has that authority by ordinance under Tennessee Code Annotated, ' 67-4-1401 et seq. Do not be
confused by Tennessee Code Annotated, ' 67-4-1425, which speaks of limitation on private acts
levying hotel-motel taxes. That provision does not apply to home rule cities that adopt a hotelmotel tax under the authority of Tennessee Code Annotated, ' 67-4-1401 et seq.
Likewise, do not be mislead by Tennessee Code Annotated, ' 67-4-503, which provides
that:
Notwithstanding any provision of the law to the contrary, except
where specifically authorized by general law, when any county has
pursuant to private act levied a tax on a privilege, no municipality
therein shall thereafter levy a tax on the same privilege and when
any municipality has heretofore pursuant to a general law or
private act levied a tax on a privilege, the county in which such
municipality is located shall not levy a tax on the same privilege.
August 9, 2002
Page 2
As I understand it, Anderson County levies a hotel-motel tax of 5%.
At first glance, Tennessee Code Annotated, ' 67-4-503 arguably blocks a home rule
municipality from levying such a tax if it has not “heretofore” levied one before the county has
levied one. But as pointed out above, home rule municipalities are permitted to levy taxes only
as authorized by general law, and home rule municipalities have been “specifically authorized by
general law” to levy a hotel-motel tax. Tennessee Code Annotated, ' 67-4-503 has its genesis in
Public Acts 1978, Chapter 835, and Tennessee Code Annotated, ' 67-4-1401 et seq. has its
genesis in Public Acts 1988, Chapter 932, and the latter does not speak of any limitation on the
right of a home rule municipality to levy the hotel-motel tax where the county already has such a
tax in place. It seems to me that Tennessee Code Annotated, ' 67-4-1401 et seq. “specifically
authorized by general law” a hotel-motel tax within the meaning of Tennessee Code Annotated,
' 67-4-503, and that it permits home rule municipalities to levy a hotel-motel tax no matter that a
county in which a home rule municipality is situated has one in place.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant
SDH/