Tourism Tax Could Be On Its Way Out

The Tourism Marketing Act (MCL 151.871 et seq), allows tourism bureaus in Michigan to charge a 5% room tax to inn owners in Michigan to be used for the purposes of promoting tourism.  Recently, however, the Act has come under fire by inn owners who allege that the tax is unconstitutional.

David Gerenson, an inn owner in northern Michigan, has filed a lawsuit alleging that the current 5 percent tourism tax collected by Sleeping Bear Dunes Visitors Bureau is unconstitutional. Mr. Gerenson believes that his First Amendment rights were violated and that he should not be forced to pay for advertisements that he does not want. Currently, he believes that he can advertise his two inns in Glen Arbor without the help of the Visitors Bureau.  Another inn owner, George Galbraith, filed a similar lawsuit in 2016, but it was dismissed after he sold his resort.

Mr. Gerenson believes that the Bureau’s tax and subsequent advertisements have mislead customers and hurt his business, especially in the winter months. Historically, this 5 percent tax on room rates has been subject to a vote by lodging owners; however, regardless of the outcome of this suit, the exposure may cause the financial winds to shift in Sleeping Bear Dunes.

This article was written by Nezar Habhab, Law Clerk.

 

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