THE FISCAL NOTE

An Examination of Tax and Fiscal Matters
By the Arizona Free Enterprise Club

Theme Park Legislation is Off Key

Senate Bill 1450 (Theme Park bill) is poor tax policy. One of the principles of sound tax policy is neutrality. Whenever possible, the tax code should be agnostic toward whatever business activity is taking place. The tax code should not micromanage the economy and should interfere as little as possible in the decisions being made in the marketplace. Private enterprise should be left to succeed or fail based on the merits of the product or service being sold, the quality of the business plan, and the execution of the plan. A private company’s ultimate success or failure should not hinge on preferential tax treatment.

On December 2, 2007, The Arizona Republic made the following additional points:

• Attendance: Decade's projections are extremely optimistic, with 6 million visitors in the first year. Only six U.S. theme parks, all in Florida, reached that level in 2006. "Nobody gets 6 million visitors their first year," says Dennis Speigel, president of International Theme Park Services.

• Market: The theme-park industry is mature, with little growth in attendance outside the Disney parks. Hard Rock Park, a similar project, is opening in Myrtle Beach, S.C., next spring. It should give an indication of whether a rock-themed park will draw crowds. Decades supporters are assuming that the $400 million S.C. park would be a complement, whetting people's appetite for a larger attraction in the West, and not a competitive threat. Meanwhile, there's competition from theme parks next door. "You've got the entire developed Southern California market just a few hours away, which markets aggressively," says Robert Niles, editor of the Theme Park Insider Web site.

Supporters point out that the new tax wouldn't replace the regular sales tax but be on top of it. They say taxpayers wouldn't be on the hook for repaying the bonds. But Kevin McCarthy of the Arizona Tax Research Association sees a risk if Decades flounders. "When bonds go bad," he says, "it reflects poorly on everyone that's involved." There could be pressure for a bailout.

McCarthy also testified in Ways and Means that the legislation is likely unconstitutional because it exempts certain taxpayers from paying property taxes.

Lawmakers continue to raise valid concerns about this bill and are on solid footing as they do.

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The Arizona Free Enterprise Club is a 501(c)(4) non-profit organization whose mission is to advance policies that promote a strong and vibrant Arizona economy. The Club believes that entrepreneurs and private enterprise are the principle drivers of our economy. The Club lobbies Arizona lawmakers in support of policies that allow the market to flourish and vigorously opposes policies that hinder private industry. Visit us at www.azfec.org.