I am a fairly hardcore libertarian, so it should come as no surprise that I oppose the so-called "Pennies for Parks" tax that is slated for a special election on Tuesday, August 5, 2014. The proposed tax is a 3-year 2% tax on all restaurant and hotel sales. Here are a few reasons that I oppose the tax:
- Lowered Standard of Living - Any time you introduce a tax, you're taking money out of the private sector and putting it into the public sector. This means that your money will be spent less efficiently than it would have been had you been allowed to allocate it to the things that you want. In other words: your standard of living decreases because your cost of living increases. There was a story recently about an Austin, TX resident who had voted in favor of every plan to "improve" that city, only to find out that she could no longer afford to live there, because the taxes had increased so much:
“It’s not because I don’t like paying taxes,” said Gardner, who attended
both meetings. “I have voted for every park, every library, all the
school improvements, for light rail, for anything that will make this
city better. But now I can’t afford to live here anymore. I’ll protest
my appraisal notice, but that’s not enough. Someone needs to step in and
address the big picture.”
Now, the current proposal is not for a property tax increase - instead, it's for a sales tax increase. Quick aside - there are plans to build a huge new park, Renasant Park, which Chip Johnson says will have an operating budget which cannot be sustained on Hernando's current sales tax revenue, expanded sales tax revenue, and property tax revenue combined. So don't kid yourself if you think this one tax will support the construction goals of the current gang running the city. Sales taxes, we are often told, affect the poorest among us disproportionately. In fact, they will not be able to expand their budgets and will have to dine out less, which leads me to...
- Will Harm Local Restaurants - Some on the supporting side say that this tax will have no impact whatsoever on local business sales. I say balderdash. Mayor Chip Johnson says in the comment stream on this post that "It should raise a little over $400,000 annually". Where does he expect this money to come from, if not from local business sales? Does he think that residents will spend $400,000 more than they currently do, which is the only way that it would not affect local business sales? In point of fact, I submit that this $400k will mostly come from reduced restaurant sales. Here's why:
If
my budget for dining out each month is, say $400, and you increase my
costs by 2 points, I have three choices: (1) dine out less frequently to
stay in budget, (2) dine out at less expensive establishments to stay
in budget, or (3) increase my dining budget.
There is no other choice.
I
cannot dine out with the same frequency at the same establishments and
stay within my budget. This is elementary home economics - if the money isn't there, I don't have the option to spend it.
Now
- we are "only" talking about an $8 increase in the cost (if that's my
budget). That does sound fairly modest, and *some* people might be able
to increase their dining budget to maintain their current dining-out frequency. But to make the claim that everybody,
or even most people can afford to go with option (3) is unrealistic
and just plain wishful thinking.
The
reality is that most people will go with options (1) or (2) above.
Option (2) is fairly troubling, as well, because by setting our tax rate
to the highest in the county, we invite people to dine outside of
Hernando in order to stay in budget.
- Where is the Current Money Going? Hernando Mayor Chip Johnson, in this email exchange posted to the Citizens Against New Tax Facebook Page, says, "The current year budget is about $708,000." So where is that money going? Why is Conger Park's kid area in desperate need of repair? Why is the map at Church Park fading away? Why is there no mulch there? Why is it that the ground cover under the jungle gym was changed from gravel to mulch to, well, not much of anything, over the past 5 years? That one seems fairly wasteful. They have almost 3/4 of a million dollars to spend, can't keep the current parks maintained, and want to build more parks? This doesn't seem reasonable. Become efficient at maintaining the current parks, and then let's talk about expanding the park system.
- Where Will the "New" Money Go? Many of the proponents of this tax have a fantasy that the money will go towards their pet project - the piece they think it should go to. I've seen comments about how the city's going to build a dog park, or a swimming pool, or put in a fancy new BMX trail. As a skateboarder, I hope that if my view does not prevail and the tax passes, that the money will go towards building the skatepark (something I might actually use). But guess what? Nobody knows where the money will go, not even the mayor:
No decision has been made on the specifics of how the money will be
spent. After the election, the Mayor and Board of Aldermen will gather
public recommendations on ideas, place estimated dollar amounts on those
projects, and then vote on which ones will be funded. The money
received from the 2% tax will be placed in a separate fund and will be
spent only on those items. (This fund will be audited by Williams,
Pitts & Beard as part of our annual audit) This is spelled out in
Senate Bill 2964 which authorizes this special election.
Here's a link to Senate Bill 2964. Here's what the law which allows the tax says it may be spent for:
For
the purpose of providing funds to promote tourism and parks and recreation
within the city,
Okay, but... what does that mean? Are we going to run cheesy "visit Hernando" ads on Memphis TV? Start building Renasant Park? Host recreational water balloon fights?
- Three Years? Doubtful! Proponents tell us not to be worried, because even if the tax passes, it will expire in three years. The MS legislature wrote the law that way, so you know we can trust that it'll expire, right? WRONG. In the comment stream on this post, the 38632 page moderator asked Mayor Chip Johnson the following question. He never responded:
Chip Johnson: You said, "The tax would be a three year tax as authorized by the legislature. It automatically expires."
You
also said, "The City of Southaven has the extra 1% tax on restaurants
and I have never spoken to one person who even thinks about it when making the trip north to dine out. "
Since
we're looking at Southaven for perspective on this tax proposal, then
it's also worth noting that Southaven recently extended their Penny for
the Parks tax for an additional three years.
It
is our understanding that Southaven was able to get the Mississippi
Legislature to extend the tax, without any additional consideration from
the citizens of Southaven.
Would
it be possible for the Mississippi Legislation [sic] to extend the Hernando
Pennies for the Parks tax as well, prior to it's automatic repeal,
without returning to the citizens of Hernando for another vote?
Remember: anything we build will have to be maintained. In other words, the $708k we currently spend on parks will not be enough for the additional facilities that will be built. We'll have to clean, paint, mow, water, etc., and those activities are not free. Sure, it'll expire in three years. If you believe that, I've got a bridge in Kennebunkport I'd like to sell you.
UPDATE: Came across this interesting bit in the MS Department of Revenue's
list of special tourism taxes (which, by the way, is what the "pennies for parks" tax really is - not a park-benefit tax, but a tourism tax):
| Southaven Restaurant Tax |
House Bill 1462, 2011 Regular Session |
A 1% tax is imposed on the gross proceeds of sales of
restaurants in Southaven. This levy is in addition to all other taxes
imposed. Effective December 1, 2011. No repeal date. |
I added the emphasis. Turns out 38632 was wrong - it wasn't extended for another 3 years. It was extended
indefinitely.
