I’m a Local. Should I Have to Pay the “Resort Tax”?

Dear Sundog: I live in Montana, one of the five proud states with no sales tax. (Others are Alaska, Delaware, Oregon, and New Hampshire.) But the ski towns of Whitefish and Big Sky charge their own 3 percent “resort tax,” not just for lift tickets but for all retail, bars, and restaurants in city limits. So if I set foot in either of those towns, I have to pay their sales tax, even though it’s not collected anywhere else in the state. Is it ethical to simply refuse to pay this tax? Sincerely: Over Taxed

Dear Over Taxed, As someone who likes to keep his own money, Sundog feels your pain when another tax collector reaches for it. But maybe the “resort tax” is nothing new; indeed it’s so common that we don’t even notice it. It often has a different name, such as a tax on hotels or rental cars. These charges are easy for governments to pass: they are aimed at outsiders who don’t get to vote! It’s taxation without representation at its finest.

Actually, the hotel taxes levied in resorts like Whitefish and Big Sky are pretty tame compared to big cities that aren’t exactly tourist destinations. The highest rate in the nation is a whopping 17 percent in both Houston and Indianapolis, while Jackson’s is only 5 percent and Aspen’s is a paltry 2 percent. As far as Sundog knows, by far the world’s largest resort tax is in the Himalayan nation of Bhutan, where visitors cough up $250 per day just to set foot inside the kingdom.

But most locals don’t notice these because they don’t stay in hotels. So Sundog agrees that the resort taxes on everyday items in Montana are more of an affront because they equally affect locals. In states that do have income tax, it’s common for resort towns like Moab and Sedona to add a few extra points to the mix to fund local projects.

If you believe in the free market, then you might predict that travelers will get fed up with the resort tax in Whitefish and Big Sky, and reroute their vacations elsewhere. But that’s unlikely. These places got so popular in the first place because they are unique, and people are willing to pay a premium. The demand for them seems to grow each year despite the additional costs. A more likely scenario is that locals will simply choose to do their shopping outside city limits in places like Kalispell or Bozeman where there’s no resort sales tax.

The larger issues at play here are that by and large, when it comes to rural outdoors meccas, the tourists have more money than the locals, and tourism imposes staggering costs on roads, sewers, and water supplies. A town of 5,000 simply can’t afford to build the infrastructure for 30,000 daily visitors. What’s more, as home prices soar, locals’ property taxes soar, and the resort tax in Whitefish can be used to offset it.

So, even though locals must cough up the 3 percent at retail stores, bars, and restaurants, most of them love these taxes! (Groceries are excluded from the tax.) Whitefish voters approved the tax by a margin of just 55 to 44 in 1995. Last year when it came up for another vote, 89 percent voted in favor. It’s enabled general road improvements, as well as the construction of bike paths.

In general, even if it feels philosophically murky, Sundog finds this taxation without representation ethical: it does more good than harm. It’s one of the few tools that ski bums and river rats possess to prevent their towns from being utterly devoured by visitors.

But here’s where it gets complicated. Not all the funds raised are used to better the quality of life for residents. In Utah, for example, 47 percent of the hotel tax is required by law to go to the Travel Council, which in turn uses the money to lure more tourists with advertising. This is bonkers. A tax that is supposed to alleviate the impacts of over-tourism is in effect used to create more tourism.

But back to your question: can you simply not pay? My take is that it would in fact be ethical to not pay: tax resisters have a long and proud history dating back to the Boston Tea Party, Thoreau, and war tax resisters. But in this case it’s probably not worth the legal and social entanglements.

In the short term, you’d be a complete pain in the ass to the clerks and waiters who have nothing to do with the resort tax, and who are operating software that doesn’t allow them to give you a “locals discount.” In the long term, you’d need an excellent and expensive lawyer. All of which is a way of saying: as with many problems that appear local, once you tug the string you find a host of issues that can’t always be solved by your personal ethical behavior. Their solution requires rolling up your pant legs and wading into the muck of politics.

Got a question of your own? Send it to sundogsalmanac@hotmail.com.