A Fairer Way to Distribute the 1/2 cent Sales Tax
It is estimated that the ½ cent sales tax will bring in $45M to the county. Roughly half that amount will be allocated to the county and the other will be distributed between 16 cities in the county, based on population.
One of the big pro-tax increase arguments is that tourists will pay 30%-40% of the tax increase. Daytona Beach is the city that generates the bulk of those tourist tax dollars but the portion returned to the city does not consider this fact. Based strictly on population, Daytona Beach will be a donor city.
Daytona Beach has a population of 68,000, but for many weeks of the year, our population doubles, sometimes, quadruples. At any given time, our city has to provide emergency services for the increased temporary population, AKA tourists. Those tourists travel on our local roads, walk on our local sidewalks, and drink our local water. In other words, tourists bring in lots of money but they also account for large increased expenses for the city.
If Daytona Beach is carrying the largest load of the tourist trade, why shouldn’t it get more of the 30%-40% of the tax increase that we’re promised the tourists will pay? Wouldn’t it be more fair to distribute the 30%-40% of tax revenue paid by tourists based on the actual amount of tourist business in each city?
If the 70% of the proposed tax increase, $31,500,000, was distributed based on population and the 30% collected from tourists, $13,500,000 was distributed based on tourism rates, using the rough estimate below, Daytona Beach could more than double what they would collect. Using this rough estimate, Daytona Beach would collect $8.0M rather than $3.7M.
Clearly the devil is in calculating the contribution of tourists to each city, I’ve provided one guestimate as to that contribution – if anyone has actual, verifiable documentation, I’d be delighted to revise. Had our government officials decided to use this approach, they could have gotten much more accurate distributions – that would have made an interesting study.
There is no law that dictates that the entire tax increase must be distributed by population. Distribution by population is easy, familiar, and acceptable to all the cities. However, this tax increase is being peddled to taxpayers as an opportunity to allow tourists to contribute more to our coffers. If that’s the main selling point, consideration could have been given to some type of distribution that accounts for the source of that tourist contribution.