Piling on Taxes to Attract Tourists, A Plan Only Government Could Love

Share on Facebook
Tweet this Story
Pin this Image

Posted by Laurel Duggan on Thursday, June 27th, 2019, 12:33 PM PERMALINK

Only government could pitch higher taxes as a way to attract business.

High tax rates have made Illinois second in the country for population loss, with over 100,000 residents fleeing the state since 2013. Meanwhile, the Convention and Visitors Bureau of DuPage County is leading the charge to hit local businesses with—you guessed it—a new tax.

The DuPage Coalition for Tourism, an arm of the DuPage Convention and Visitors Center, has proposed a 2.5% occupancy tax on hotels and motels on top of existing state and local taxes. The money, it claims, will be used for “tourism and economic development purposes.” Of course, “economic development” is often cover for giveaways on the taxpayer dime.

The Coalition says the funds will go towards advertising and recruiting sports events and conferences. It is unclear how effective the project will be at bringing in crowds, given manufactured tourism’s tendency to fail. What is clear is that occupancy taxes will artificially raise the price of accommodations in DuPage – dissuading potential visitors or driving them to stay in neighboring areas. Hotel owners, the tax’s supposed beneficiaries, are strongly opposed to the measure.

“The state is looking to increase taxes, there’s a $15 minimum wage coming and there was talk in Oak Brook of a new food and beverage tax,” said David Carlin, the president of the Oak Brook Chamber. “It’s taxes, non-stop, and I don’t think a tax is the answer here.”

Cities within the county already collect bed taxes and have their own funds for promoting tourism and other industries. Enacting a similar tax at the county level is redundant, not to mention expensive. It would be stacked on top of existing taxes which already hover over ten percent for local hotels.

Interestingly enough, the organization gunning for this tax, the DuPage Coalition for Tourism, is itself funded by local hotel taxes. So a bureaucracy wants to raise taxes to feed itself. That’s not surprising, but nobody else in the county should fall for their scheme. 

Occupancy taxes are often lauded as a way of bringing in revenue without taxing local residents, since tourists are the ones who pay taxes at hotels. In reality, such taxes force hotels to raise the price of rooms, which drives customers into nearby markets where rooms are cheaper. The subsequent decrease in visitors has a ripple effect. Visitors will choose to stay in hotels one or two counties away, causing local restaurants and shops to lose business.

The Coalition is misguided in its belief that tourism investment would draw crowds to DuPage. They state on their website that they strive to compete with Indianapolis and St. Louis for tourism, but these cities have professional sports teams and bustling urban landscapes. Competing with those towns is unrealistic. As local hotel owner Jim Nagle explained, “No one is coming to DuPage for vacations.” The county is headquarters to four Fortune 500 companies; the majority of its visitors come for business.

For vacationers visiting a theme park or a beach, minor differences in occupancy taxes may not be a deterrent for an especially attractive destination. For business trips, however, even minor differences in hotel prices will quickly push potential visitors to nearby towns with lower tax rates. Occupancy taxes make suburbs like DuPage less competitive in regional markets.

In order to draw in visitors and build up its economy, DuPage should focus on lowering costs to compete with neighboring areas rather than handing more money to government to spend in the name of attracting tourists.

Advocates for the tax argue that DuPage is not competitive enough for its hotel industry to survive without an influx of public investment. The county’s economic records tell a different story; DuPage is thriving. In 2017 alone, DuPage generated 23,000 new jobs. State and local tax revenue increased by 8.7 and 3 percent respectively.

Even if the local economy was tanking, occupancy taxes would hurt the economy, but that’s not the case. Also, you’ll recall hotel owners oppose the tax, which suggests they will not die without it.

The DuPage Coalition for Tourism is paternalistically trying to force their “help” upon unwilling hotels that would rather be left alone. The Coalition should listen to Jim Nagle. “We’re already spending a lot to promote ourselves with people who know what they’re doing,” he said. “We don’t need government doing our job for us.”

In fact, there is a long list of businesses and cities that actively oppose the measure. The mayor of Naperville worries that his city “will be tapped for the benefit of businesses and residents outside of Naperville, which seems to be an endless tactic used against [their] community.” Five commerce and tourism organizations in the town have formally opposed the tax. The majority of DuPage County’s hotel rooms are in Naperville, which consequently would be burdened with the bulk of the taxes.

Even the Naperville City Council unanimously opposes the tax.

In order to pass the county-wide tax, legislators will have to change state law. So the path is steep. But that does not mean taxpayers should not make it steeper.

Concerned residents can fight this intrusive and harmful tax by expressing their concern to their Illinois state representatives as well as the County of DuPage, which oversees and funds the organization that is advocating for the tax increase.

Photo Credit: Lauren Bailey

×