Why Is There a Lodging Tax, Anyway?

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.