Taxing Tourists at Sleeping Bear Dunes

The Mackinac Center is again challenging the constitutionality of an assessment on the rental of rooms at hotels, motels and inns. Michigan enacted the Community Convention and Tourism Marketing Act in 1980. The law allows regional tourism bureaus to charge lodging establishments an assessment on the rental of rooms to pay for advertising they undertake, whether an establishment chooses to belong or not. The assessment was once capped at 2 percent of the cost of the rental price, but the limit was later raised to 5 percent.

David Gersenson operates two inns in the Glen Arbor area near the Sleeping Bear Dunes National Lakeshore, the Sylvan Inn B&B, and the Lakeshore Inn. The inns had been subject to the 2 percent assessment, or “tourism tax,” and then the local tourism bureau, the Sleeping Bear Dunes Visitors Bureau, voted unanimously to raise the tax to 5 percent. With the Mackinac Center Legal Foundation’s help, Gersenson is challenging the constitutionality of the assessment because it violates his free speech rights. The United States Supreme Court has held that compelling a business to pay for advertising that it does not want is a violation of the First Amendment if the tax is only going to fund advertising speech.

It may have made sense for regional tourism bureaus to advertise before the internet, when advertising beyond your region was a daunting task. But today, inns and tourist attractions can advertise easily on social media and search engines. Too often, tourism bureaus have been referred to as “the tourism mafia” that use the funds compelled from the room renters to favor one facility over another. Other times, their efforts are simply ineffectual. In any event, no one should be forced to pay an advertising agency for a service they don’t want or need.

The case against the Sleeping Bear Dunes Visitors Bureau is the second tourism tax lawsuit for the Mackinac Center Legal Foundation. The first was brought in Indian River but was dismissed when the plaintiff sold his property and was no longer subject to the assessment.