Arkansas 2% tourism tax sets new record, up 51% in 2021

Arkansas’ 2% tourism tax totaled $20.544 million in 2021, up 51% compared to 2020 and up 16.7% compared with the pre-pandemic record year of 2019. The 2021 gain suggests the tourism industry is largely back on track following almost two years of COVID-19 disruptions.

Collections of the tax set records for each month in 2021 between March and December, according to figures from the Arkansas Department of Finance and Administration.

The tourism industry entered 2021 following a year in which the COVID-19 pandemic shuttered much of the state and national economy for most of the year. The state’s 2% tourism tax revenue fell almost 23% in 2020, and fell to levels not seen since 2014. 2019 set several records for the sector in terms of hospitality tax revenue and job gains, and marked the fifth consecutive year of growth as measured by the Arkansas Tourism Ticker.

Following are the previous five years of tourism tax revenue.
2021: $20.544 million
2020: $13.61 million
2019: $17.608 million
2018: $16.428 million
2017: $15.897 million

In the past decade, the tax is up 70.8%, rising from $12.025 million in 2011 to the $20.544 million in 2021.

Of the Arkansas counties with more than $1 million in 2% tourism tax revenue, Washington County posted the highest percentage gain in 2021 over 2020 with 71.7%. Following are the top five counties in terms of 2% tourism tax revenue in 2021 and percentage increase from 2020.
Pulaski: $3.962 million, up 58.5%
Garland: $2.243 million, up 49.7%
Benton: $2.001 million, up 53.3%
Washington: $1.511 million, up 71.7%
Carroll: $1.192 million, up 43.2%

Mervin Jebaraj, director for the Center for Business and Economic Research at the Sam M. Walton College of Business at the University of Arkansas, told Talk Business & Politics earlier this year that investments in years prior to the pandemic will pay off when the pandemic eases.

“We had invested as a state a lot into that particular sector. We have great hunting and fishing facilities. We’re seeing kayaking, biking and those types of activities really pick up. People are into hiking. … We’ve seen a lot more investments in restaurants and bars in downtown areas, not just in Northwest Arkansas, not just in central Arkansas, but across small cities, Blytheville and El Dorado, for example, across Arkansas,” he said in this report about the state’s tourism industry.

Items on which the tax is applied, includes:
• Rentals for transient guests, such as AirBnB locations;
• Camping fees at public and private camp grounds, except for federal property;
• Most items offered for rent at a boat dock, marina, canoe or raft rental business; and
• Admission price to a tourist attraction.

The tourism tax and more info on the Arkansas’ tourism industry will be published later this month in the 2021 Arkansas Tourism Ticker report.