A new visitor tax is being proposed in Sioux Falls. Okay (A copy of the proposed ordinance DOC: rental-fees;

The Sioux Falls Development Foundation wants Sioux Falls voters to decide whether to enact a $3 per day tax on most vehicles rented in the city to help fund economic development.

I have no issue with this, well a couple, and I will get to that. I have often thought that the room tax in Sioux Falls is NOT high enough, and having another visitor fee or tax is fine with me, as long as it is directed properly. But here are my issues, and I had to pinch myself agreeing with councilor Dean Karsky;

Councilor Dean Karsky said insurance companies often pay for rental cars for customers involved in car accidents while repairs are made. Protecting Sioux Falls residents from the proposed tax would help minimize any increase in insurance premiums that could result from a local car rental tax.

“80 percent of the rental cars are rented by non-residents of Sioux Falls, so if we could exempt residents from the tax, I think it would be the right thing to do,” he said.

Dean is right, that exemption should exist. This SHOULD be a visitor tax, not a local tax.

I also question the city take. It is estimated they will be paid $175K for administering the tax, which I find high. An almost 18% take is nothing in comparison to what CC processors take, which is around 1-3%. Seems like a city payoff to get on board.

I also wonder if getting this on the Spring ballot should not have been done thru petitioning actual voters instead of the city council, and the almost silence on this initiative up until this point.

The City Council is scheduled to hear a first reading of the ordinance Jan. 19. If given the council’s blessing, a public vote on April 12 would be required before collection of the proposed tax starts in July.

Why has the public been left out on this tax increase? Sounds like they wanted it to go under the radar. I have no problem with the public voting on this as they should, but the process up until this point has been anything by democratic. The Development Foundation should be ashamed.

UPDATE: After talking to several people about the fee proposal today, I’m starting to lean completely against it especially after a foot soldier who follows city government sent me this today;

How will we be able to exempt local citizens?
1.  Is it even legal to say that if you are from Sioux Falls let’s say you don’t have to pay the tax, but if you are not you have to pay the tax, on the same good/service sold at the same place?
2.  Is that even good policy?
3.  Assuming we do this and its legal (exempt locals) that brings up the question of administration and compliance.
    a.  I assume the rental car agency is going to have to determine if you are in the city or not when you reserve the car and charge it or not charge it.  There is an administrative burden there.
   b.  When you implement something like this sort of local tax, and it has a specific clause excepting local citizens, that brings in compliance issues.  Who is going to audit or oversee these businesses to make sure the tax is collected, and waived in the right circumstances?
As an aside, there is also the philosophical discussion about what taxes should be and how to administer them.  You might have a cigarrette tax to try to get people to not smoke (change behavior) and pay for health costs for it.  You might have a booze tax to pay for all its social ills.  You might charge a wheel tax to people who license cars, in recognition that those cars are breaking up the roads, and those roads need to be maintained.  In those instances there is a clear cause/effect type relationship.  Those who benefit from a service, or, those who impose a cost on the whole society pay to address those costs.
What does someone renting a car have in relationship to paying for sewer lines out at Foundation Park?  There really is no relationship.  Its picking one specific industry and taxing that narrow activity, and really for something that isn’t related at all to the people using it, or, the activity they are engaging in.
Phase 1 of this development they say will generate I think they said 150 million+ in construction activity.  Phase 1 is 1/4 of the property.  So let’s say this will be all told 600 million of construction.  The infrastructure is 40 million.  So why not just wrap it into the total cost and impose the extra cost to those who buy parcels there?
Sure there would be a benefit, more taxes, more jobs from this development.  But the thing is any time someone starts a little business in any corner of our city they generate more taxes and jobs.  They all have some impact.  Some more than others obviously.  But some little guy starting a restaurant doesn’t necessarily have the connections to get a tax imposed for them, by their government, and interestingly on a customer base that may have nothing to do with or ever use their services.


4 Thoughts on “UPDATE: I’m all for visitor taxes, but I also like transparency, and the democratic process

  1. How about the landowners and the businesses who want to be in these developments pay for this shit. I’m fucking tired of everyone else paying for these “high paying” jobs to be imported to this town.

  2. anonymous on January 15, 2016 at 7:20 pm said:

    Amen, LJL.

  3. “high paying” jobs usually mean $12 an hour. also, is the development foundation a private entity?

  4. The Guy from Guernsey on January 18, 2016 at 2:10 pm said:

    Although they are he-coon tycoons of their respective industries (snicker, snicker, snicker), it is clear that neither Logistics Buddy nor The Fruit Club plan to pay for the cost of developing Foundation Park to meet their requirements.

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