The case for a tax increase

It’s purely coincidental this issue of the Business Times includes stories about a proposed increase in lodging taxes and the remarkable efforts of a woman who’s work over the past 27 years has been funded with lodging taxes. The Grand Junction City Council didn’t vote to put the lodging tax increase on the ballot until well after Barbara Bowman was interviewed for the cover feature.

The two stories raise an interesting question, nonetheless: If the combination of lodging taxes, dedication and passion can accomplish so much, what would happen if even more funding were earmarked for those efforts?

Ultimately, Grand Junction voters will have to ponder the answer in deciding in November whether or not to double the lodging tax from 3 percent to 6 percent and change the way additional revenues are distributed. There’s a good case to be made, though, for increasing the tax.

The council voted 6-0 to pass a resolution to seek approval from city voters to double the lodging tax from 3 percent to 6 percent. Revenue from the tax, imposed on hotel and motel stays, funds Visit Grand Junction, the city tourism and destination marketing organization. Revenue from the proposed increase would be split three ways: 1.25 percent to Visit Grand Junction, 1 percent to the Grand Junction Regional Air Service Alliance to support additional direct flights to and from the Grand Junction Regional Airport and 0.75 percent to the Greater Grand Junction Sports Commission to promote tourism related to sports activities and events in the Grand Valley. It’s estimated a 3 percent increase in lodging tax would generate an additional $1.5 million in revenue annually — $$625,000 for Visit Grand Junction, $500,000 for the Grand Junction Regional Air Service Alliance and $375,000 for the Greater Grand Junction Sports Authority.

Generally speaking, higher taxes don’t necessarily correlate with better government services. Government is better at some things than others. Better at building and maintaining infrastructure, for example. Changing behavior through regulation? Not so much. That’s not to mention the substantial risk of inefficiency associated with government bureaucracy.

There are four reasons the proposed increase in lodging taxes is different:

First, there’s a nexus between imposing additional taxes on hotel and motel rooms and funding efforts to promote travel and tourism in the Grand Valley. In fact, those efforts could bring mean even more business for the hospitality industry.

Second, the increased tax revenue would help fund an even broader effort that includes not only destination marketing, but also efforts to increase commercial air service and promote tourism related to sporting events.

Third, visitors pay lodging taxes while residents enjoy the benefits.

Fourth, and perhaps most important, travel and tourism is an essential economic driver in the Grand Valley. By one estimate, the economic effects of the travel industry in Mesa County accounts for more 5,500 jobs and nearly $140 million in annual wages. The effects of the travel and tourism sector extend beyond hotels and restaurants to nearly every business. Moreover, tourism serves as a gateway to additional economic development. Some people who visit the Grand Valley return to operate businesses here.

Thanks in part to the hard work of employees like Barbara Bowman and Debbie Kovalik and the partnerships they’ve developed over the years, Visit Grand Junction has enjoyed extraordinary success in promoting the Grand Valley as a desirable destination for travelers around the world and in improving the local economy in the process. That kind of effort deserves additional support.