Taxes on Tourists Prove Damaging
As state and local governments look for ways to address budget deficits, one area that is being commonly looked at is taxes on visitors and tourists. Raising funds through car rental fees, hotel room taxes, and tourism-related sales taxes have the potential to bring in additional revenue, but also carry the danger of damaging the tourism economy.
In Wisconsin, the recently passed state budget bill includes a significant tax increase on car rental fees in Milwaukee, Kenosha, and Racine Counties to provide funding for light rail transit. While such taxes might not directly impact local residents, they discourage visitor sales that provide positive economic effects to local businesses and our state. What they buy and where they go is impacted by the level of taxation, and recent new 34visitor34 taxes in other states have already been shown to depress tourism expenditures. The Legislature’s focus should be on helping our tourism industry and avoiding excessive taxes on visitors that spend money in our state.