By Gorge Volsky, Instant Software - Director of Research
County tax revenues decline when tourism slows. Travel has declined 20% according to credible sources, and this threatens county revenues from occupancy taxes, food/beverage taxes, and, sometimes, gasoline tax that may trickle back to the counties.
Some counties are talking about increasing taxes, raising these questions:
• During a period when the Federal Government is trimming agency budgets to pay down unprecedented debt and when many State governments are on the verge of bankruptcy, should County governments cut spending rather than increase taxes?
• Where tax revenue is down because people have less money to spend on vacations, does it exacerbate the problem to raise taxes (forcing renters to pay more for their vacations)?
• If tax increases cannot be avoided, will the long-term interests of the community be different depending on whether the tax burden is placed on the rental manager, the renter, or the homeowner?
No matter how you answer these questions, you as vacation rental managers must have input before your county governments acts. You are the vacation rental experts. Your business will suffer if new taxes are imposed without a proper understanding of the potential consequences. You are best positioned to educate yourself and your county government. If you as industry stakeholders don’t take the lead, you can hardly complain later if your local officials do the wrong thing.
My next blog will address the bulleted questions and explore reasons why the economic impact of a tax increase may vary, depending on whether the new tax burden is imposed on renters or homeowners.
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