Should the legislature allow cities to charge another tourist tax, in addition to the rental car tax, the bed tax and, in some places, the resort tax? A new tax, the local option sales tax, would be collected by any city whose voters approve it.
We’ve been told tourists are not paying their fair share. “They’re using our infrastructure and not paying for it!” In reality, tourists pay for the services they consume, and then some.
If a tourist buys 100 gallons of gas, they pay $52 in tax which builds roads and bridges. Tourists’ airline tickets include fees to maintain and expand airports. Tourists patronize restaurants, fishing guides, retailers and car rental agencies. Businesses earn profits and pay income taxes which support state and local services. Support for water purification and wastewater treatment plants is built into lodging and restaurant prices.
When tourists pay a $500 hotel bill, about $15 goes to property tax. Property tax revenues go mainly to schools, though tourists don’t enroll their children. Some property tax goes to the sheriff’s department and jails, though tourists are infrequently arrested and jailed. In these ways, tourists subsidize locals.
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It’s not fair to ask tourists to pay for services they don’t need but that locals benefit from. The user pays principle is fair.
There are a few other reasons to resist the local option sales tax. 1. Left-out cities would want some of the tourist towns’ revenues. 2. Montanans would pay part of these new taxes; some estimate in-state residents would pay 40-70% of local option sales taxes. 3. Taxes affect behavior; expect lower consumption of the taxed services and products. Expect fewer tourists.
But the main objection to local option sales taxes is that tourists more than pay the costs of the infrastructure and services they use. Grabbing more tourist dollars to reduce our property taxes is unfair.