A Sales Tax is Not Our Only Option
Some Food for Thought on Raising Money:
Playing devil’s advocate and just asking the question, what would happen if we raised property taxes in Daytona Beach, restricting the use of that increased revenue to the infrastructure needs included in the ½ cent sales tax proposal?
There might be a few reasons to consider this:
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The money raised all stays in Daytona Beach. While the City Commission has not proven a good steward of our money in the past, it may be easier to elect better stewards in the city rather than in the city AND in the county. We need more responsible, responsive members in BOTH bodies, but it may be easier to get control of the spending at the city level, particularly if that portion of our city tax could be restricted to a specific purpose.
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A sales tax is regressive; people with lower incomes pay a higher percentage of their income in sales tax than do people with higher incomes. Property taxes are slightly less regressive since they are based on the value of a property owned. In Daytona Beach, owners of lower valued properties may actually save money over the ½ cent sales tax. If residential landlords are fair as they pass a property tax increase along to their tenants, the tenants may also end up spending less.
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Our infrastructure does need improvement, that’s not going to be free, and that is an expense that typically will increase over time. As infuriating as it is that we gave $45M to the Speedway, etc., we still need a responsible plan to fund ongoing maintenance and capital improvements to our current infrastructure.
In addition to pitching the ½ cent sales tax as being 30%-40% paid by visitors, we are being told the impact on our pocketbooks would be so small as to be negligible. That may be true. But what is also negligible is the amount actually returned to Daytona Beach.
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Let’s look at some numbers:
If a Daytona Beach resident buys $10,000 of taxable goods a year, the ½ cent sales tax collected will only be $50. Of that $50, only $4.13 will be returned to Daytona Beach; the remainder will be distributed throughout the county.
The city needs $2.5M-$3.0M a year to keep our roadways in good repair over their 20 year life cycle. The city currently has $800,000 a year available for these roadway purposes. To create additional revenue of $3.0M, the city tax rate would need to be raised .62 or $62 per $100K of taxable value. Believe it or not, that might save some taxpayers money over the ½ cent sales tax, depending on their spending habits and the valuation of their property.
Using the chart above, roughly 11,000 Daytona Beach property owners (39%) who spend $5,000 a year on taxable goods could actually save money with a .62 property tax increase instead of the ½ cent sales tax increase. Almost 7,000 Daytona Beach property owners (25%) who spend between $5,000 and $10,000 a year on taxable goods could actually save money with a .62 property tax increase instead of the ½ cent sales tax increase. Additionally all money collected with a .62 property tax increase stays right here in the city.
There might be a few reasons to NOT consider this plan:
Many will readily point out that Daytona Beach already has a high tax rate and that the city has not invested wisely in the basic infrastructure in the past.
Property taxes can rise as taxable valuations increase and this expense is beyond an individual’s control. Meanwhile, an individual can always find creative ways to avoid purchasing taxable items and so have more control over the amount of sales tax paid.
Daytona Beach is a member of the larger community in Volusia County. Perhaps as citizens of the county we should be willing to contribute to the well-being of the entire county and not just our city?
No matter where you stand on the issue of taxes in general or the proposed ½ cent sales tax in particular, we hope this has given you some food for thought.