Taxing tourism

The concept of picking the pockets of those who do not have representation has had enduring appeal to jurisdictions within and without the US. In both large cities and small towns, mayors and civic leaders have resorted to taxing out-of-towners ostensibly to bring in more of them either by building a convention center or enlarging an existing facility.  Historically, it has been a resounding failure in most instances. A 2005 study by scholars at the Brookings Institution suggested that, in most instances, investing in convention centers was a poor if not wasteful use of public resources and that the many projects that were afoot were likely to end up as a drain on the local exchequer. That prophecy has come to pass in a number of locales like San Diego, Orange County, FL, Fairfield IA and Nashville, TN. 

That the idea of levying a tax as an incentive to for an economic activity requires the upending of reason appears not to deter the US government either. The Travel Promotion Act of 2009 started with the premise of establishing" a non-profit corporation to better
communicate U.S. entry policies to international travelers and promote leisure,
business, and scholarly travel to the United States."  The sponsors of the bill recognize that the "decrease in travel to the U.S. (over the past 8 years) was the understandably tightened security
standards and resulting waiting periods at our borders, which had the
unintended consequence of erecting barriers to travel."  A notable additional barrier was the enactment of ESTA which required residents of visa-waiver countries to obtain electronic travel authorization prior to leaving for the US (each authorization lasts for two years). But an additional barrier (and cost) in the form of a $10 fee has understandably irked several of the visa-waiver countries with the EU threatening to retaliate by requiring a visa for US citizens.  The (current) contrasting approach to tourists and business visitors on the part of the EU is underscored not only by the absence of any electronic authorization but also the complete lack of any forms to be filled prior to landing in any EU country.

It is unclear why at least some number of tourists from outside won't consider alternative locales in light of the additional burdens. What is clear is that, before long, the $10 fee is going to be ratcheted upwards as politicians and bureaucrats demand  a larger budget presumably to attract more visitors when, in fact, the opposite is more likely to happen.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.