When Is a Tax Not a Tax? When You Call It Something Else
So why should anyone care or pay any attention to any of this? Because it sets in motion a fundamental change in the way taxes can be increased and privatizes our public tax money for a private benefit.
We all know about our TOT — the transient occupancy tax paid mostly by tourists at hotels. We get to vote if the TOT is increased, because the money goes to the city and is used to pay for tourist- related costs and promotion, plus some city general fund expenses (police, parks, etc.) that benefit both the public and the tourism industry.
It’s actually quite a bit of money and it affects every part of our hospitality-sensitive city so it makes sense that it has city support and direct supervision. It’s equally important for the public to have a vote on it and a voice in how the tax money is spent.
A while ago, the hotels created a private tax to only support their interests. It was called a tourism marketing district assessment and the hotels that were included tacked a couple of cents onto their customer’s bills to fund it.
That tax expires in just a few months. I’m not sure that type of private industry tax was a good idea, but arguments could be made on both sides and since it was for a limited amount of time and money, so be it.
Now there is a push to renew the tax, but not for five years like before. This time the hotel folks want to extend the tax for almost 40 years, locking up more than a billion dollars of tax money for themselves. Only the hotel folks get to vote, and those votes are “weighted,” meaning that those who have the bigger hotels get more votes than those with the little hotels. The time-honored “one person, one vote” is history under this scheme. Worse, not one cent will benefit the public and the public is shut out of voting on it.
This is not an isolated deal, either. Back in April, the hotel owners voted to raise the TOT anywhere from 1 to 3 percent to help fund the proposed Convention Center expansion. That’s another billion or more dollars in tax revenue that the public never got to vote on. They call it an assessment, but it’s a tax. It’s being challenged in court, so it’s not a done deal yet, but it’s easy to see where this is heading.
So why should anyone care or pay any attention to any of this? Because it sets in motion a fundamental change in the way taxes can be increased and privatizes our public tax money for a private benefit. It’s not just a few bucks we are talking about; it’s at least $2 billion dollars that will be locked up for almost 40 years, without a public vote or any meaningful public input on how the taxes should be spent. And it allows those with the most property or biggest hotels and motels to control the outcome of elections because the more stuff they have, they more votes they get.
It’s easy to imagine other big entities figuring out ways to raise taxes for their pet projects or self-promotion. For example, what’s to prevent the restaurant and bar owners from forming an entertainment district and charging customers an additional 2 or 3 percent on their bill? They will pretend it’s not a sales tax — just an entertainment and beverage assessment for the purpose of promoting their businesses, but it will be us paying the tax.
The City Council is set to vote on this on September 25. The actions include approving the Management Plan and adopting the Resolution of Intention declaring their intent to: renew the district and levy assessments, give notice for a public meeting, a public hearing, and causing ballots to be mailed. But don’t hold your breath waiting for the postman to ring twice to deliver your ballot; he isn’t even going to show up at your door.
Donna Frye is a former San Diego City Councilwoman.
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