The proposal in the fiscal year 2004 budget which will raise the hotel room tax from 8 percent to 10 percent is ill advised. Families traveling on a non-extravagant budget may think twice about booking a vacation in the Virgin Islands (which is already high priced) when they discover that 10 percent must be added to the daily room rate.
An article in the Washington Post on Nov. 19 in reference to federal spending states that "the Congress does not understand economics." That goes also for the Virgin Islands Legislature.
Some folks compare the Virgin Islands room tax rate with mainland hotel room rates, but those cities on the mainland do not depend on tourism as their No. 1 source of revenue.
There is a prevailing thought in the territory that the tourists should bear the burden of taxes "because they are only here for a short time." That is poor thinking because potential visitors do consult the Internet to see which destination will offer them a good deal for their hard-earned dollars. Potential visitors are, in fact, shopping around. The Caribbean destinations are competing with other world destinations, and while the U.S. flag can make some difference, it is not the ultimate decision-making factor.
I suggest that, while it is not too late, the Legislature roll back the room tax to 8 percent, and that the potential revenue which will not be yielded be made up by cuts in spending in the FY 2004 budget.
Eric E. Dawson
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