|Stadium Sticker Shock?|
|Topic||Market Failure, Regulation, And Public Choice and Equilibrium|
|Key Words||Tax, Fees, Cost, Price|
Phoenix, Arizona, is the latest city to levy a tax on rental cars rented at the airport in order to raise funds for a new sports stadium, as well as to promote tourism and youth sports. The 3.25 percent tax takes the total taxes and fees to 27.75 percent of the base rental price. The tax, with the help of a 1 percent hotel tax increase, should cover about one-half of the $331 million cost of the new retractable-dome home for the Arizona Cardinals football team.
Other cities have similar stadium-related taxes - such as Atlanta, Austin, Cleveland, Dallas, Detroit, Houston, Indianapolis, San Antonio, and San Diego. They range from 2 to 5 percent.
The winner is the community. Citizens vote in favor of such taxes to shift the cost to visitors who cannot vote. The Travel and Sports Authority in Phoenix says that travelers benefit not only from the stadium, but also the convention center floor that lies beneath the field when it is retracted. Besides, it is argued, renters will not notice the tax increase, particularly as taxes are in the same range as in other cities. However, the Travel Industry Association questions how many travelers will really use the facilities. Car rental companies also oppose tax increases. In Tampa, they were powerful enough to block a similar tax proposal.
(Updated April 1, 2001)
|Source||Chris Woodyard, "New tax funds stadium," USA Today, February 26, 2001.|
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