Tuesday, March 25, 2014

Sales Taxes and City Council

Still no cable broadcast of city council meetings, at least none that I can fine.  The council is supposed to vote on raising both the general sales tax and the hotel tax.

It is much easier for residents to support an increase in the hotel sales tax, simple because that tax is paid by visitors to the city, rather than by residents.  Only on rare occasions would a local  stay in one of Carbondale's hotel, though several local motels have become de facto residential motels, offering weekly and monthly rates, rather than relying on night by night clientèle.  Those using the motel as a residence will, of course, have to pay the higher tax, but said tax will not affect the larger population of Carbondale.

Similarly most residents will find raising the sales tax preferable an increase in the property tax, since the sales tax falls across all residents of Carbondale as well as those outside the city who travel here to work and shop. A property tax would concentrate the tax among a comparatively small sector of the population, moreso in Carbondale than in other communities, due to the roughly 70% of property in town owned by absentee landlords.  Most property in Carbondale is rental property, so any property tax increase would fall upon a comparatively small number of owners.

A sales tax increase spreads the burden out more widely, though it does fluctuate more than does a property tax and forces those who work here, but may live outside Carbondale, to help pay for municipal services they use when in town, increasing tax revenues beyond those which could reasonable be generated solely from residents (thought the argument that, since Marion's sales tax is higher than Carbondale's, we can more easily raise it seems somewhat specious to me).  The problem, of course, with the sales tax, is that it is regressive, taking a larger percentage from those with lower incomes than those with higher.  Arguably, property owners are significantly better off than the average Carbondale resident, roughly 66% of which lived below the poverty level in 2009, and could more easily afford an increase in the property tax than the average Carbondale resident could afford a sales tax increase.

Still, no mention of a property tax increase is on the agenda, so we shall probably see an increase in the motel tax tonight, as well as, after significant breast beating,  a sales tax increase.  Hopefully, the council enacts one with a sunset clause in it, requiring them to revisit it a few years hence.

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