‘Heads in beds’ tax a reasonable idea gone sour

Here’s a story about creeping greed to fund community projects that may or may not be worthy causes. Greed can tarnish the luster of good intentions, and Palm Beach County is not exempt from creeping greed. Now, it appears we may face it again.

Palm Beach and Breakers
Photo credit: visitwpb.com

The news is out that local “officials agree” that they need to increase the county bed tax. The county Tourist Development Council hosted a strategic planning session recently. Apparently, tourism bureaucrats with a personal and professional stake in building fiefdoms angled the session toward increasing the bed tax.

The TDC brought in a tourism consultant pro to exhort the crowd, saying Palm Beach County is getting “outgunned” by other tourist destinations that are spending more money than we are. Sounds to me like he was the hired gun, firing a message to local tourism leaders that they must spend more money or they’ll fall behind.

The sales pitch was that the county, which received $27 million last year from its 5 percent bed tax, needs to hike the tax to 6 percent, or else the county will be an also-ran in the tourism business.

Some wiser heads pointed out that before deciding to raise taxes, perhaps the group should have a plan, and maybe talk about what to do with the money, what to expect from results and whether incentives have been developed for tourists to come here.

Here’s the worm in this apple: This kind of tax increase strategy is called incrementalism. The media strategy for selling incremental tax increases is, “What’s unfair about a penny increase? No one’s going to notice one penny on a dollar.” Of course, when the years pass and the tax creeps up 1 percent at a time, it morphs into a huge burden.

It’s like the middle-age guy losing his hair, one hair at a time. One morning, he wakes up and looks in the mirror, and he’s bald!

What no one is talking about, because tourism special interests pooh-pooh it, is the insidious history of this tax. There is no better example of a tax designed to get a foot in the door — and prying it wide open as the years pass — than the bed tax. This tax originally was sold to the public as a reasonable “heads-in-beds” tax of 1 percent on each night’s hotel/motel lodging, paid mostly by tourists. It passed in a voter referendum in September 1982.

The tax increased to 2 percent in 1984, on the promise that it wouldn’t dissuade tourists from coming. It went to 3 percent in 1989, again sold on the basis that tourists would pay for most of it, although from the start, limited-term condo renters also paid the tax. In 1994, it was jacked up again, to 4 percent, then to 5 percent in 2006, paid by “every person who rents, leases or lets” living quarters for six months or less in any conceivable accommodation. Now, the push is on to expand to 6 percent.

At some point, citizens must stand up and say, “This far and no farther.” This isn’t about whether the arts, beaches, filmmaking and the environment are important. They are, and they’re already receiving millions in bed tax funds. This is about greed creeping into public funding. It’s about crossing the line from reasonable taxes to “OK, people, this has got to stop.” We are not a forever-flowing fountain of tax money.

At some point, escalating tax hikes become one reason for tourists to decide not to come here. They come mostly for our beaches, blue water, clean air and mild climate, not to get blasted by tax-creep. Enough already.

John R. Smith

John R. Smith is chairman of BIZPAC, the Business Political Action Committee of Palm Beach County, and owner of a financial services company. He is a frequent columnist for BizPac Review.
John R. Smith

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