Why Is There a Lodging Tax, Anyway?

airbnb

In this morning’s edition, the Albuquerque Journal joined the chorus of voices calling for Airbnb and other room-renting services to pay lodging taxes: “While private homeowners should not have to abide by the full collection of regulations inflicted on public business sites, the idea of collecting the same taxes innkeepers pay to promote the hospitality business has merit.”

Under Section 3-38-15 NMSA 1978, the state allows local governments to “impose by ordinance an occupancy tax for revenues on lodging.” Regardless of the size of the municipality or county applying the levy and the rate chosen, a sizable chunk of the revenue generated must be spent on “advertising, publicizing and promoting tourist-related attractions, facilities and events.”

Wait a second. Shouldn’t the tourism industry spend its own money, as it best see fits, to market New Mexico’s scenery, history, culture, and cuisine to the world?

It’s a question that goes unasked, and not just in the Land of Enchantment. Government at all levels has involved itself in tourism for decades. Elected officials don’t feel any need to impose taxes to promote health clubs or car dealerships or hardrock mining, but tourism is somehow thought to be … different.

Balderdash. The lodging tax, and the activities it funds, have difficult-to-document “benefits” to the public, and tourism promotion fails to meet the standard for essential government services.

Of course taxes should be applied in a nondiscriminatory fashion. Whether you’re a homeowner or a giant corporation, if you’re in the lodging business, you should be subject to the lodging¬†tax. But delving beyond the issue of fairness reveals some disturbing questions about the “need” for the levy. A strong case can be made that it shouldn’t exist at all.

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2 Replies to “Why Is There a Lodging Tax, Anyway?”

  1. As a 43 year long lodging operator, I agree 100%. In fact, when the State was pushing to raise the allowed rate from 3% to 5%, I was the ONLY lodger in the Taos area to oppose the increase. If 100% of lodgers taxes went directly 100% to tourism promotion, I might be OK with LT.

    Over the years, the Town of Taos has collected around a million dollars a year in lodgers tax revenues. Guess which town in NM has the LOWEST occupancy rate! The state has averaged around 57-58% occupancy yet Taos only manages about 50%.

    The Town of Taos squandered much of that revenue on non promotion related spending. Their promotion spending has been a political plum with meaningless performance standards. For example, one recent year, the performance measure was to increase the LT collected by 1.5%…that doesn’t even keep up with inflation! Squandered probably applies across much of the state.

    If and when specific measurable standards of real results are applied, added funding of tourism promotion might be OK. That real results standard is what should be applied to EVERY government program! I don’t care how it makes you feel, I don’t care if your intentions were good, I want more people sleeping in Taos lodgers beds every night of the year…especially shoulder & off season!

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