Jul 122011

On KUOW’s Weekday program July 6, I suggested Washington’s tourist industry tax itself to fund tourism promotion now that the state’s puny effort (that spawned such forgettable campaigns as “Say WA”) have dried up (here’s a link to a New York Times piece that appeared in the Seattle Times).

I asked rhetorically why taxpayers should have to pay. Especially in this age of austerity, when tuition at the University of Washington is going up roughly 20%, let those who benefit from tourism promotion (Holland America and Argosy Cruises came to mind while I was on the air) get together with peers to raise money for promotion. Aren’t we told constantly, after all, that private industry is more efficient than government?

I did not know then that the Seattle Hotel Association (SHA) was preparing to ask the city for a $2 a night head tax to finance tourism promotion, especially in the slow winter months. My reaction: Bully for SHA, congratulations. In this Contained Depression, we’re going to see a lot more of these kinds of user fees.

Taxes on hotel rooms, rental cars, entertainment admissions, restaurant meals and the like, to say nothing of cigarettes, are voluntary, imposed on those who for the most part have the means to pay. They can be avoided by those who choose not to consume. They are progressive!

If Seattle’s higher hotel tax drives business away, hotels will have to adjust their cost structures. I suppose one could argue that hotels will take it out on the help as a part of the race to the bottom. That’s a discussion for another day.

My only question: Why wait for the city to impose a tax? In a free market, hotels can charge what they please. Get together, agree on a fee and impose it. No one’s stopping you.

While you are at it, widen the net to include restaurants and other businesses that benefit from tourism (Ride the Ducks and similar attractions). The wider the base, as we all know from Econ 101, the lower the rate. The benefits of a co-operative effort should outweigh the cost of “free riders,” affected businesses that fail to participate.

When times are flush, there may be a slim rationale for asking taxpayers to foot the bill for tourism promotion or a state film office or any number of other worthy causes. A Libertarian, of course, would argue otherwise, insisting that government ought to stick to basics like public health, public safety, fire prevention, transportation infrastructure, etc.

But times most definitely are not flush. Quite the contrary. Every indication is that this “contained depression” or Lesser Depression is not over and may in fact continue for many years. Imaginative privately funded efforts are in order in any number of niches that now have access to the public purse. Seattle hotels, bravo! Go for it!

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