- Voters are unwilling to pass new taxes.
- As percentages or sales or property values, taxes go up automatically ever year already.
- Bureaucrats are looking for new revenue sources.
- Iberia Parish’s proposal would allow bureaucrats to raise taxes without a vote of the people.
- Iberia’s Hotel / Motel taxes could be raised by bureaucrats to 20% – the top 5 in the nation.
- The proposal represents a 73% tourism tax increase!
Although local governments never seem short on excuses to raise your taxes, lately it seems that area voters are having none of it. Over the last two years, every single new tax (and some renewals) have been rejected. As Ronald Reagan once said, the problem isn’t that the people are undertaxed; the problem is the government is overfed. With a 10¢ sales tax in nearly ever single municipality and record-high property taxes during a period when voters are struggling to make end meet, it’s just not the time to raise taxes. The people have had enough.
Bureaucrats aren’t oblivious to this sentiment. In times past, they were very successful in using low-turnout elections to raise taxes. However, as taxes keep sneaking up and up, the public is beginning to catch on. If the government is going to continue raising their revenue through taxation, rather than prioritizing spending like many of us have to do at home, they’re going to need to get creative. Really creative. They’re going to have to figure out a way to raise revenue without voter approval.
Raising taxes without a vote of the people
Taxes go up all by themselves anyway. Sales tax, as a percentage, is tied to the value of money. When inflation requires that you spend more money for the same goods, it also means the amount of money you spend on taxes is going up. Similarly, when the value of property goes up, because property taxes are based on a percentage, the money you’re required to fork over to the government also goes up. In fact, more times than not, your representatives “roll forward” your tax millages after every reassessment takes place. Every four years, most property owners see significant up-ticks in their property taxes as a result of these roll forwards.
When it’s still not enough
Iberia Parish is getting creative. Their sales tax is already over 10% in some places. Putting more taxes on the ballot won’t do and they already have a few special taxing districts. Those are often called a TIF (tax increment financing) or EDD (economic development district) tax. What’s a bureaucrat to do? Enter Louisiana House Bill 574.
Many special taxing districts exist because the state legislature has authorized them by state law. Those districts exist and are controlled by city councils or parish councils. However, some taxes created by the state are paid to the state, and then returned to the local governments. There are several, but this bill involves the Tourism Tax, or Hotel / Motel tax.
The purpose of the bill is to authorize Iberia Parish to levy an additional 5.5% tax on hotel rooms in the area. Consider the taxes you pay on a hotel room usually appear as a single line item, and not itemized by the many, various fees they include.
Iberia asks for the highest hotel tax in the state, and top 5 in the nation
What House Bill 574 does is adds 5.5% to an existing 4%, making the hotel tax 9.5%. Add to that the other sales taxes, and the tax rate to stay in a hotel would be right around 20%. That would put Iberia Parish smack-dab in the middle of the top four hotel taxes in the nation. They are Columbus, GA 22.99%, Macon, GA 22.7%, Augusta, GA 20.2%, Atlanta, GA 19.9%.
As a point of reference, New Orleans, probably the most visited tourist destination in Louisiana, has the highest combined hotel tax rate we could find at 15.5%. Iberia Parish’s current rate of 14.2% isn’t very far away.
How much money is involved?
According to page four of the IIDF’s latest audit, the amount of revenue they received from the hotel tax was $190,176. The HB-574 references their current portion of the tax as 2%, or half of the 4% collected. Dividing the revenue generated by the 2% rate gets us to $9,508,800 in total hotel revenue in the area. So, a 5.5% tax increase to 9.5% means that if this tax were already in place, hotels would have been on the hook for $903,336. Comparing that with the $380,352 that they paid and the math on the difference works out to a 73% tax increase!
Keep in mind this is just the hotel tax. Hotels also already pay sales tax and property tax, employment tax, etc. so the burden is ever increasing.
How is this taxation without representation?
The bill doesn’t just raise the hotel tax rate to 9.5%. It only raises the ceiling and applies some dedications to how the money can be spent. The real problem is it authorizes bureaucrats to raise the tax at their discretion. The most likely scenario for this would be their unelected board raising it only one or two percentage points per year until it reached the maximum. That’s something that only elected officials are supposed to be doing in open meetings.