Expert: Tourism-Targeted Taxes Are Harmful

A pattern in recent years of ever increasing taxes on travel-centric services and entertainment—such as rental cars, lodging, restaurants, and amusement park admissions and parking— could have a damaging effect on tourism in the coming years, according to budget and tax legislative specialist John Nothdurft of The Heartland Institute in Chicago, which discovers, develops, and promotes free-market solutions to public policy problems.

In a recent column in Newsblaze, Nothdurft wrote many politicians see these taxes as a way to tap additional revenues from nonvoting visitors and avoid a backlash from their own constituents. But he contends they’re not accounting for the long-term effect of such taxes.

“These targeted tax increases are an unfortunate trend,” Nothdurft told FUNWORLD. “They are becoming more en vogue because they touch only a segment of the constituents. But it’s horrible economics, and it’s not sustainable. With an amusement park, politicians believe a tax on admissions or parking won’t impact locals because they think it’s paid by outside visitors. They say it’s only a 5 or 10 percent additional tax, but when you tax something, you get less of it.”

He explained that as potential park guests start looking at the overall price of going to a park versus doing something else, they may choose the latter, and if they do, it has a financial impact on every business in the community that feeds off the park.

“It’s a compounding effect,” said Nothdurft. “[Guests] are already paying increased gas taxes, hotel taxes, restaurant taxes, and rental car taxes, and then when they get to the park, they’re hit with more taxes.”

Nothdurft suggests parks join together with other local businesses being impacted by the taxes to inform area citizens that visitors aren’t the only ones paying these taxes, and the compounding effects will be detrimental to their communities.