Tourism Meccas, Tax Oases

Posted on May 31, 2005
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"Desert tourism meccas" like Phoenix, Tucson, Palm Springs and Las Vegas may be "thriving," as an Arizona Republic headline suggests, but they are not all thriving alike.

In a detailed review of the four desert oases, the Republic covered nearly every eccentricity that defines the character of each destination, save one: taxes.

Specifically, occupancy taxes. The range is wide in the above group, and interestingly, the differences in occupancy taxes parallel the differences in occupancy rates.

For instance, in the "key first-quarter season" just ended, Las Vegas had the highest percentage of rooms filled, 89.1 percent, and Palm Springs was on the low end at 73.8 percent. However, Las Vegas' occupancy tax is a full 4.5 percent lower than Palm Springs'. Phoenix and Tucson round out the middle of the group, both with occupancy and tax rates just shy of 80 and 12 percent, respectively.

It seems from this pattern that taxes have something to do with choice of vacation destination in much the same way as taxes influence choice of place to live. That brings into serious question plans for public financing of convention centers and hotels.

Cities may build it, but visitors come when the price is right-and taxes are low.

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