Hotel and motel owners in the Wildwoods - who are required to charge their guests combined state and local taxes of 14 percent - have long been irked by the fact that no such taxes are added onto private condo rentals.
That taxing structure puts the hotels and motels at a competitive disadvantage. And the proliferation of condo units on the island has only heightened the dissatisfaction with the situation.
The inequity is the result of state Division of Taxation regulations that spare "facilities other than hotels" from paying the state sales tax and state and local room taxes. The distinction the state draws depends on whether maid service, linen service or other common hotel services are available.
This year, for the first time, the Division of Taxation extended the 7 percent state sales tax to "condotels" - individually owned condo units in buildings that are operated exactly like hotels. That's certainly a welcome and overdue move that levels the playing field somewhat.
But it still leaves thousands of private condo rentals that go untaxed - and that make it harder for Wildwood's valuable hotels and motels to stay in business. Hotel and motel rooms are important in a resort town because they don't have kitchens - guests are forced to eat out, which in turn fuels the resort's restaurant industry.
In 2008, the Greater Wildwood Hotel and Motel Association sued to force the state to tax both kinds of rentals equally. Both the state Tax Court and the Appellate Division ruled against the association, saying the courts could not force the state to impose the state taxes on private rentals. The courts did, however, encourage the state to revise its rules.
The answer to this problem has always been in the hands of the Legislature. But extending the state taxes to private condo rentals is a non-starter politically. It certainly is the fair thing to do - but any lawmaker who voted for it would be accused in the next campaign of voting to raise taxes.
Intelligently crafted legislation, however, could solve this problem - substantively and politically.
As we and others have suggested over the years, the entire room-tax structure could be recrafted in a revenue-neutral way so that the overall rate is lowered - really, 14 percent is kind of steep - but the base is extended to include condo rentals. That way, hotel and motel owners get their level playing field - plus a lower tax structure overall, which would make the entire Jersey shore more competitive.
Granted, this isn't a major issue statewide. It's not a sexy topic. It involves the dreaded "tax" word. But it's the kind of practical, nuts-and-bolts legislation that can make a positive change and that state government ought to be able to accomplish.