Cover story
EDINBURGH SHOCKED THE DMO WORLD WITH A PROPOSAL TO SLASH THE CITY MARKETING BUDGET
AND INTRODUCE A BED TAX (SEE P.37). PHILIP COOKE LOOKS AT GLOBAL EXPERIENCE
OF USING SUCH A FUNDING SYSTEM
any countries and cities
are able to devote large
sums of money to
promoting and developing
their tourism industries via a system
that taxes the visitor, not the host.
These competing regions, most
notably in the USA and Canada, use a
Transient Visitor Tax system to raise
funds that can only be used for the
promotion and development of their
tourism industries, and they do this by
means of a locally-determined tax that
is placed on related expenditure.
Hotel accommodation is just one of
several related transient visitor taxes
that are employed in the USA and
which include a Food and Beverage
Tax added to restaurant bills and a
Convention Centre Development Tax
added to the cost of hiring a conference
centre or similar venue.
Transient visitor taxes are
‘hypothecated’ taxes which means that
the income they generate can only be
used, by law, for specific purposes – in
this case to attract more visitors, to
invest in business tourism facilities and
resolve environmental problems
created by visitors.
When I first visited Miami in the
1990s it was operating four different
Transient Visitor Taxes which were then
generating US$40.5m for
re-investment in the city’s visitor
economy, derived from:
- a 3% Convention Centre
Development Tax, yielding $17.2m pa
- a 2% Resort Tax (i.e. the Bed Tax),
yielding $12.5m pa
- a 2% Food and Beverage Tax,
(hotels and restaurants only) yielding
$6.7m pa, and
- a 1% Sports Facilities Tax, yielding
$4.1m pa.
These taxes were then used to fund
the Miami Beach Convention Center
and Miami’s Orange Bowl Football
Stadium, Lipton’s Tennis Stadium and
even Miami’s Formula One Grand Prix
circuit - activities which were to then
“Transient
visitor
taxes are
hypothecated
taxes and
this income
can only be
used, by law,
for specific
purposes.”
attract further high-spending
overnight stay visitors in a virtuous
economic development cycle.
In New York, my hotel bill in those
days included a 6% City Occupation
Tax, a 6% Room Occupation Tax and a
13% Liquor Consumption Tax!
Next stop on that trip was Albany,
the state capital of New York - a hugely
politicised city with a suitably massive
hotel stock that was needed to
accommodate visiting politicians and
media. Here, a 3% Accommodation Tax
generated c.$670,000 pa, which was
being used to repay money borrowed
by the city for the construction of the
Albany Convention Center.
Self-regulating
Today, transient visitor taxes are also
self-regulating and can help prevent
the modern-day scourge of
‘overtourism’.
For instance, if a US city gets greedy
and taxes its incoming transient
visitors at too high a level, then
ISSUE 99
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CONFERENCE & MEETINGS WORLD
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41