Statement: RI Budget’s New Tourism Tax Likely to Fail

STATEMENT
July 1, 2015

Promoting Tourism by Taxing Tourism is Misguided, Unenforceable
Will Seek Repeal of “Killing the Golden Goose” Provision

Providence, RI — With the FY-2016 budget now law in the Ocean State, one of its most under-reported and counter-productive provisions is a new tourism tax that is likely to backfire on the industry, according to the nonpartisan RI Center for Freedom & Prosperity.

Included in the budget are provisions that will levy new ‘sales’ taxes and compliancy red tape on local travel agents, in-state vacation rentals, short-term rental and vacation rental advertising platforms, and the online travel innovators that drive tens of thousands of global travelers to Rhode Island destinations each year. The $5.4 million in anticipated revenues is earmarked to pay for tourism board marketing.

“You don’t grow the state’s vital travel and tourism economy by taxing it. It’s a classic ‘killing the golden goose’ scenario,” said Mike Stenhouse, CEO for the Center. “As our Center has advocated for years, sales taxes are a highly sensitive factor in driving consumer purchasing. It is doubtful that this new tax will yield anywhere near its revenue projections, leaving the tourism industry damaged and without its anticipated marketing revenues.”

The Center, the state’s leading free-market research and advocacy organization, also believes that many of the provisions are unenforceable. Altogether, this new tax scheme will not only fail to spark an economic rebirth, it could harm a pillar of the state’s economy. It will put Rhode Island at a competitive disadvantage with neighboring states which do not impose such taxes, and will lead to fewer visitors, less economic activity, and less overall tax revenue.

“The only communities and tourism boards to benefit from this aspect of Rhode Island’s budget will be those in, Massachusetts, Connecticut, Vermont and New Hampshire,” concluded Stenhouse.

The Center suggests this tax on tourism rentals should suffer the same eventual fate as the ill-fated Taylor Swift tax.

Media Contact:
Mike Stenhouse, CEO
401.429.6115 | info@rifreedom.org

About the Center
The nonpartisan RI Center for Freedom & Prosperity is Rhode Island’s premiere free-enterprise think tank. The mission of the 501c3 nonprofit organization is to return government to the people by opposing special-interest politics and advancing proven free-market solutions that can transform lives by restoring economic competitiveness, increasing educational opportunities, and protecting individual freedoms.