The tax man cometh...to wherever you plan on visiting this summer

Obviously, increasing taxation on leisure spending is a stupid idea when leisure spending is down. The goal is to stimulate more travel, not to discourage it by making it more expensive. But that's the way government works: The people who balance the books are often the ones controlling the legislation, and common sense has to work its way into the system from the outside.

Local governments are hurting for cash. Orlando's tourist tax revenue is down 18%, which is worse even than after 9/11, and it's not expected to recover for years. But the golden goose isn't the first place other cities should look for some extra meat.
Yet that's exactly what many destinations are stupidly doing. On May 8, Hawaii's State Legislature voted to increase the tax on hotel rooms from 7.25% per day to 8.25% beginning July 1. That rate will inflate again in July 2010 to 9.25%. Some local apologists are claiming the hike won't scare lots of people away, but it'll be tough to know for sure, mostly because visitors to the Aloha State have plummeted anyway.

In Alaska, a new $50-per-head cruise tax is being blamed for a drop of 120,000 visitors to the state. Ireland instituted a €10 ($13.97) tourist tax on April 1, as arrivals collapsed. A paper there calculated that the amount lost by people who are scared away, or €300 million ($400 million), will dwarf the amount collected; €125 million ($175 million).

Places around the country are jumping on the tax-the-tourist bandwagon. Myrtle Beach increased sales tax by 1% to fund tourism marketing, something that thrills rival attractions in North Myrtle Beach, which sets its own taxes at a lower rate. South Dakota's are up by 50% on July 1, and Bozeman, MT, wants to bump up its nightly charge by $1.

Most of the increased taxes are for small-market destinations, or places where people are more likely to drive for the night rather than visit on a flying vacation. Ultimately, they wind up penalizing people with lower budgets who can't afford to jet across the country or the world for their time off.

It's a foolish path. But then again, tourists don't vote, so it's easier to punish outsiders than to take the heat for true fiscal prudence in local services.

Taxes in the News

    This video image provided by Westwood One/Metro Networks shows a Continental Airlines flight 61 from Belgium taxing at Newark Liberty International Airport in Newark, N.J., Thursday, June 18, 2009. The pilot of the plane died over the Atlantic Ocean on Thursday, but the jet landed safely with two co-pilots at the controls. (AP Photo/Westwood One/Metro Networks)

    AP

    FILE - In this Sep. 16, 2008 file photo, Rep. Gene Green, D-Texas, left, accompanied by Rep. Chet Edwards, D--Texas, Sen. Kay Bailey Hutchison, R-Texas, right, gestures during a news conference on Capitol Hill in Washington. The oil and gas industry has accelerated spending for lobbyists in 2009, more than any other major sector in the past few years, and that effort is scoring at least some small victories as companies try to fight prospects for new taxes and climate and drilling rules. (AP Photo/Susan Walsh, File)

    AP

    Juana Reyna inspects freshly made lipstick at Mary Kay's Dallas factory, whose output includes exports for Mexico, May 26, 2009. The company says it's paying $450,000 a month in tariffs and taxes on products sent to its fourth-largest market. (Jim Mahoney/ Dallas Morning News/MCT)

    MCT

    Gov. Arnold Schwarzenegger said that he would veto any budget bill that includes new taxes beyond what he has already proposed, while talking to reporters about the state budget outside his Capitol office in Sacramento, Calif., Wednesday, June 17, 2009.(AP Photo/Rich Pedroncelli)

    AP

    Gov. Arnold Schwarzenegger said that he would veto any budget bill that includes new taxes beyond what he has already proposed, while talking to reporters about the state budget outside his Capitol office in Sacramento, Calif., Wednesday, June 17, 2009.(AP Photo/Rich Pedroncelli)

    AP

    FusionSolar, from Custom-Bilt Metals, is a more-affordable rooftop solar power generation system integrated within a standing seam metal roof. A turn-key solution, FusionSolar delivers design simplicity, achieves lower installation costs and qualifies for tax incentives. When builders, contractors and homeowners specify FusionSolar with a standing seam roof, they get a complete system, including all necessary components, detailed schematics and specifications for wiring and electrical components that an electrical subcontractor needs for installation. Since no specialized solar installer expertise is required, sheet metal and roofing professionals are able to install the standing seam roof just as they would a standard metal roof. FusionSolar visually blends in without penetrations in the roof, delivers up to 7 LEED points in the on-site renewable energy category and also achieves a higher relative efficiency under high temperatures and low light than solar glass. Prospective customers receive a customized (ROI) report to help determine payback period and to understand how much total power consumption is offset by generating clean, renewable and dependable electric power. (Photo: Business Wire)

    Business Wire

    Texas Gov. Rick Perry talks about tax relief before signing a bill giving a tax break to 40,000 small businesses Tuesday, June 16, 2009 in Houston. The measure extends a tax exemption to Texas business owners with up to $1 million in annual revenue. (AP Photo/Pat Sullivan)

    AP

    CHICAGO - JUNE 16: Children protest against proposed budgets cut that would slash funding to many social services organizations June 16, 2009 in Chicago, Illinois. Illinois Gov. Pat Quinn has threatened massive cuts in funding to these agencies if legislative leaders fail to pass a hefty income-tax increase. (Photo by Scott Olson/Getty Images)

    Getty Images

    CHICAGO - JUNE 16: A demonstrator protests against proposed budgets cut that would slash funding to many social services organizations June 16, 2009 in Chicago, Illinois. Illinois Gov. Pat Quinn has threatened massive cuts in funding to these agencies if legislative leaders fail to pass a hefty income-tax increase. (Photo by Scott Olson/Getty Images)

    Getty Images

    CHICAGO - JUNE 16: Desiree Edwards demonstrates against proposed budgets cut that would slash funding to many social services organizations June 16, 2009 in Chicago, Illinois. Illinois Gov. Pat Quinn has threatened massive cuts in funding to these agencies if legislative leaders fail to pass a hefty income-tax increase. (Photo by Scott Olson/Getty Images)

    Getty Images


Increase your money and finance knowledge from home

Advice for Recent College Grads

Prepare yourself for the "real world".

View Course »

Economics 101

Intro to economics. But fun.

View Course »

Add a Comment

*0 / 3000 Character Maximum