Tangled Finances
In this month's Association News section, on page 50, Sean McCurdy makes a comprehensive argument against the practice of levying taxes on rental cars in order to fund local projects. McCurdy and the NBTA campaign that he represents argue that these taxes are often used to fund projects that do not meet the "benefit principle." Simply put, the benefit principle holds that those who benefit from a specific government expenditure should be the ones who support it by paying taxes. Thus — just about everyone's favorite example — when taxes are collected to support a sports stadium, the taxes paid by rental car companies and their customers should be proportionally smaller than those paid by members of the sports industry.
That seems like a pretty fair division of responsibility, especially when you consider the price of a ticket to a Giants football game to the cost of renting a car for a day. Do rental car companies get more business if they are located near the stadium? I doubt it. And since they don't participate in any tax program that supports the Hoffman LaRoche facility down the road from the stadium in the Meadowland, it seems fair that the Giants football organization should not receive support from them either.
One of the problems is that even local economics isn't simple — or even entirely local — anymore. In the case of a sports stadium, its proximity is a great benefit throughout the week as those who work there patronize other area businesses. And when they take their salaries home, it's often to some other market area.
The difficulty of applying the benefits principle to real life is being played out in courts and council chambers across the country. In Pittsburgh for instance, a $2-a-day car rental tax went into effect on January 1 to help support the port authority that operates Pittsburgh International Airport. There's a movement afoot to repeal that tax on the premise that revenues from local gambling can be used instead. According to reports in the local newspaper, the proponents of the change aren't worried about the burden on the car rental companies but on local property owners. They've traced the ripple effect of taxation to a different area but it too has a lot of concerned inhabitants, probably some of the same ones who also argue against the car rental tax.
The benefit principle is not actually among the main benchmarks of sound tax policy, according to the Tax Foundation, "even though some economists think it is important." The first benchmarks that must be considered, continues the Foundation in its official blog, are simplicity, transparency, neutrality and growth-promotion. But the benefit principle does have its place: "The state in which the producer is physically located is providing a number of actual benefits to the producer for which it can, under the benefit principle, require taxes paid in return."
With the TIA thumping for government funds to promote tourism and the prospect of increased privatization among the world's airports — in which they too could become part of lucrative mega-enterprises like sports stadiums — it's a good time to carefully consider the whole issue and its ripple effects. It might not be long before each of us is called upon to put our own convictions to the test.
By The Numbers
Only in New England's collegiate corridor could a project claim to both eschew cookie cutter design and be based on a mathematical formula. When the new Hotel Indigo opened in Newton, MA, in January, David V. Shamoian, president of the Peabody Hotel Group's brand management division, observed that the hotel would deliver "something more than the typical 'cookie cutter' experience."
The hotel, which will be managed by Peabody, is a "unique interpretation of the Hotel Indigo concept," says Jim Anhut, senior vice president in charge of management of the Hotel Indigo brand, which is owned by InterContinental Hotel Group. The distinctive design, even by Indigo standards, combines math, art and nature and is based on "the Golden Mean" (also known as the Fibonacci Sequence or Phi). The Fibonacci Sequence / Phi describes a pattern of numbers that increases by adding the two previous numbers until it reaches the fixed value of 1.618034 - aka "the Golden Mean." Its use in the hotel is present in several design decisions. For example, the headboards in the guest rooms are 'Golden Rectangles,' meaning the dimensions are Fibonacci numbers.
Speaking Of Benefits ...
Foreign airlines landing at Beijing Capital and Shanghai Pudong Airports will be paying lower airport fees beginning this month. Credit goes to IATA, which led the campaign to convince the Chinese government to lower the fees paid by international airlines operating in China. Those fees have been two to three times larger than what's been levied on China's domestic airlines.
The burden is shifting to the airlines landing at the small and medium-sized airports throughout the country, which means that the country's own domestic carriers will be anteing up. The government's five-year plan for 2006 to 2011 calls for the construction or expansion of 60 airports in the central and western regions.
Star Struck
The proposed legislation to require airlines to delineate a children's movie section has apparently died in committee. It's possible that it was never a serious proposal in the first place: it was proposed last September and called for an effective date of January 2008. Congress hardly ever moves that fast. But such proposals do sometimes simply migrate into other proposals, where they have a better chance of getting through under the radar. Whether that's what has happened or not, the idea comes at an interesting time.
Technologically, it could soon become a moot point. Many airlines already have individual viewing screens on seat backs. Plus, audio-video on demand (AVOD) is being developed rather quickly. That capability would make it easier to control what young passengers are able to watch but the airlines' enthusiasm goes far beyond that. Already familiar with the success of in-flight magazines' advertising business, they sense a gold mine AVOD's potential as an even more targeted advertising medium. They'll be able to segment in-flight audio/video advertising audiences according to their passengers' personal demographics as well as their destinations. What's more, some envision using AVOD to track the success of individual ads.
But as international tourism brings more visitors into the US and Open Skies brings more foreign airlines into the US market, there is another reason to be careful about what's being offered as in-flight entertainment. US and Asian tastes don't always match European's, according to the World Airline Entertainment Association (WAEA). When it comes to nudity and sex scenes, US and Asian travelers are more conservative; when it comes to violence, Europeans are more sensitive. That pretty much leaves comedy, romantic comedies and light adventure as the ideal flight flick, says the Association. Moreover, "movies shown on the overhead systems on US-flagged carriers are edited if their theatrical rating exceeds PG-13, or if they contain profanity, nudity or violence beyond what the airline deems acceptable. Each airline, in consideration of its passenger demographics for each route, strives to select movies that are most appropriate and least offensive to the broader viewing audience. In conjunction with makers of the movies, edits are made and approved by the films' studio/production companies to make the films as airline friendly as possible."
The Last Word
Interesting note in ANA's recently-released corporate plan for 2008, especially in light of more frequent references in the United States to the need for an intermodal approach to regional travel. ANA has resolved to "employ simple rotation" at its airports so that aircraft will be able to return to their home bases more quickly and on-time performance can be improved. It will also help it to compete more effectively with the shinkansen (bullet train), notes the airline.