It’s wonderous what government can do that business can’t. It can slash its revenues by cutting burdens on taxpayers, then reduce its spending, but still keep providing everything it did before and add new bells and whistles in the bargain.
That, at least, is what state and county governments are dangling in front of us if you heed the rhetoric floating around. It sounds great – if it could be done without throwing our whole economy out of kilter.
The idea is to simply dump the big tax burdens onto the backs of visitors, who fuel Florida’s biggest industry, and then assume that far higher costs to visit won’t reduce tourism because there’s no place else they’d rather visit and they have all the money in the world to do it.
That idea has been floating through Florida for decades. But it hasn’t been tried, because while visitors may annoy us, we depend on the income they bring and we can’t afford to drive them away.
So, what are our lawmakers trying to change?
At the local level, as we wrote last week, Miami-Dade commissioners want to cut property tax revenues by giving breaks to many groups of hard-pressed taxpayers. One commissioner estimated that would be a $530 million hit to the county, whose main tax revenue is those property taxes.
At the state level, the governor and some legislators are looking at cutting or even eliminating property taxes, whose revenues flow to local governments. But the House speaker also wants to cut the sales tax, which is a prime revenue source for state government.
Let’s see, local government revenues would decline and state revenues would also shrink if the slash-taxes maneuver somehow became reality.
So, if we did that, how would we finance those government services that actually benefit us?
“Tax the tourists. Tax some of the foreigners,” Gov. Ron DeSantis said in answer to that question last week.
Miami-Dade Commissioner Kionne McGhee a week earlier said that since tourists pay most of the sales taxes, the rates could be ratcheted up to let them carry the burden of financing government if property taxes were to be removed from all primary residences in the state.
It’s our local version of a tariff. Make visitors and people from abroad pay extra and the rest of us would benefit at their expense.
Its fatal flaw is also that of a tariff: while we’re levying it on someone else, we’re the ones who wind up paying. The pain is just passed through.
In the tariff, it’s the US consumer, not the seller abroad, who pays higher prices.
In taxing the tourists, we suffer the economic pain when fewer of them come to rent our cars, fill our hotel beds, dine at our restaurants, shop at our stores and attend our venues. Today, Miami-Dade has 155,700 visitor industry employees. How many fewer would we have if the industry faded? (Hint: think of the 2020 pandemic, when we had 70,000.)
It’s not like we don’t already soak our visitors. As Mr. McGhee stated, they pay a big chunk of the sales taxes in this county, which include not only the 6% required by the state but also a 1% local share that includes our tax to add transit. The fewer tourists who come, the less our tax collections and the less transit we get.
But those taxes are just starters. We also charge a 2% food and beverage tax at upper-end restaurants that tourists visit. We charge visitors a 2% tourist development tax. We charge them a 1% professional sports facilities tax. They also pay a 1% homeless and domestic violence tax. We are the beneficiaries of those taxes, but our visitors pay.
Oh, and did I forget the vacation and short-term rentals tax that winds up eating into the pockets of many visitors?
If you’re going to replace more than a half billion dollars of property tax revenues with a tax on visitors, that heavy tourism tax levy is going to spike – nobody yet knows how high.
As for the notion that visitors have to come, look at Florida’s film industry. Two decades ago we were awash in film projects. Then the state decided to yank away incentives that sweetened the pot for the industry because they weren’t going to go elsewhere – except they did, and our high-skilled film professionals left with them and never came back.
Today, we’ve lost most of the filming business. We removed incentives just when other states were adding them. Georgia and others ate our lunch. The film industry here is a shadow of the past.
It’s not that we shouldn’t cut taxes. I’d love it. We’d all benefit. And government certainly spends money on programs that each of us thinks are unnecessary.
The problems is, each of us thinks a different set of programs are useless and each of us has a group of services that must stay. Once something exists in government, it takes on a life of its own.
Only one thing in our tax-and-spend ecosystem is sacrosanct: an income tax – we’re having none of it. Which is great, but it makes other taxing decisions harder.
So slash away, Tallahassee. Cut spending, Miami-Dade. We’ll applaud. None of us wants to pay as much as we do.
But there’s no free lunch. Visitors won’t come forever if we elevate taxes. Already we’re seeing the Canadians who used to flood Florida in winters go elsewhere because of higher costs.
There is a tipping point – and we exceed it to our own economic peril, because like a tariff, Floridians will wind up paying the cost.
The post There is no free lunch: tourists won’t pay our taxes for us appeared first on Miami Today.