The defenders of bad tax policy justify bad tax policy by pointing out that someone else is paying the tax that provides the benefit that the rest of us enjoy. In government, we call that a fiscal solution. In the parlance of the common folk, it's known as theft. How else can you define taking something that doesn't belong to you and using it for your own benefit?
It's too easy to absolve ourselves of any guilt surrounding such a ploy by pointing out how the fruits of the thievery go to the community - the so-called "common good." That's what is supposed to make it different from hotwiring your neighbor's car.
Such is the case of the hotel room tax that's charged to folks who overnight in Boise. Guests pay the tax, and the tax is used to provide a service they may never use. And the hotels that benefit are really the ones who are in close proximity to the convention center supported by the levy, yet guests at all hotels pay the cost.
For most of us, this tax goes largely unnoticed. It's innocuous. But the recent decision of the Simplot family to construct Jack's Urban Meeting Place - a development in the name of the late J.R. Simplot - is enough to spark some discussion about the mild injustice that visitors to Boise and some local hoteliers get to experience every time a hotel room is booked in the capital city. For each room, the Greater Boise Auditorium District charges the hotel guest a 5 percent room tax. The auditorium district collects well more than it needs to pay for the upkeep on the Boise Centre on The Grove, located in Downtown, and pay operational costs of the Boise Convention and Visitors Bureau. No one feels bad about that because the generic "visitors" to Boise are the ones paying. For their largess, we have convention facilities and the means with which to continue the selfless promotion of Boise. Thank you, folks who don't live here, for your generous support. We couldn't have done it without you.
But there are fundamental problems with this arrangement. First, the auditorium district is a government entity. It levies a tax to provide services that ought to be provided by the free market. And if the free market can't provide the service, it means the demand probably doesn't exist to justify its existence. It also circumvents the free market by making the customers of hotels on the outskirts of town subject to the same tax even though hotels closer to the convention center are likely to be the real beneficiaries of the existence of the meeting facilities. It seems to put those more remote hoteliers at a fundamental economic disadvantage.
Additionally, the district is clearly levying too much. The Boise Centre on The Grove operates at a profit, living off the receipts of the customers who use its meeting facilities. Therefore, most of the tax collected is banked. District leaders hope that one day in the very distant future all those surplus tax collections will allow it to supersize its meeting and convention accommodations, resulting in the ability to host larger events. The district has collected about $7.5 million of the $38 million it needs to move ahead with the project.
But Jack's Urban Meeting Place is expected to include meeting space for 500 people. The Boise Centre on The Grove provides the majority of its business to meetings of between 300 to 500 people but is looking to double capacity. Why then the need for a 5 percent tax to subsidize a building project that may never be needed? I asked Pat Rice, the Boise Centre on The Grove's general manager. Rice says the district still needs to expand, and reducing the tax would only lead to a longer gestation period for the bigger space.
If the auditorium district board lowers the tax rate, "It takes all the opportunity away from the district to fund an expansion sooner rather than later," he said.
But I come at this issue differently. Jack's Urban Meeting Place should change the metrics for the decision to continue with the expansion project. This should be viewed as a chance for a government entity to get out of the way and help the Simplot family's project be a success, not be co-equals with a private sector operation. It's a chance to eliminate the disparity of a tax being levied on guests at all hotels, even if those hotels don't benefit from the business generated by the downtown meeting facilities. And it's a chance to lower a tax that's too high to begin with and rife with unfairness to the guests of the state capital, who are being compelled to pay for meeting space even if they're here to visit relatives or see the area attractions.
Wayne Hoffman is the executive director of the Idaho Freedom Foundation, a nonprofit, non-partisan think tank. E-mail him at [email protected].