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Truth on taxes

November 19, 2008

Re "The folly of the 'fun tax,' " Opinion, Nov. 13

Peter Navarro argues that if taxes were imposed on admission prices at amusement parks, such as Disneyland, overall revenue would decrease. This is based entirely on his claim that a "conservative assumption" is that attendance will drop 1% for every 1% increase in the cost of a ticket, with resulting losses in taxable park revenue, employment and ancillary services such as hotels. But we do not need to assume anything: We can examine this in the real world.

In January 2003, an adult day admission to Disneyland was $47. By January, 2005, that had increased about 12.75% to $53. Navarro's theory would predict a corresponding 12.75% decline in park attendance. In fact, attendance was 12.7 million in 2003 and 14.5 million in 2005, a 14% increase.

Theories are all well and good, but reality is usually better. Navarro's theory of a direct relationship, or any relationship, between increased ticket cost and decreased attendance at Disneyland is demonstrably incorrect. The facts suggest that the state might expect increased revenues with the imposition of this tax with no significant change in park attendance, and thus no adverse effect on overall tax receipts.

It is Navarro's theory that is Goofy.

John Hamilton Scott

Sherman Oaks

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