DOES THIS MAKE CENTS? Double taxes on hotels/motels; give tax breaks via TIF/EEZ

On what to do about business taxes, City Hall seems hopelessly confused

COLUMBIA, 9/1/12 (Beat Byte) -- First, give multi-million dollar TIFs -- tax increment financing -- to the troubled Canada-based owners of the Tiger Hotel and to a St. Louis-based businessman who tore down the old Regency Hotel, only to leave a big hole in its place while he looks for private financing.

 

Next, look high and low for manufacturing businesses and aging dinosaurs like IBM that need huge tax breaks like EEZ before they will relocate to Columbia.

 

Finally, boost taxes on local hotels, motels, and other hospitality industry businesses by nearly double.

 

Those steps are apparently the economic development recipe at Columbia City Hall, which -- as MU economics professor Joseph Haslag warns against in the preceding article -- is up to its proverbial neck in picking winners and losers in the local business marketplace.

Most surprising may be Mayor Bob McDavid's lodging tax hike push, designed to boost another perennial failure: the Columbia Regional Airport -- by hiking hotel and motel taxes from 4% to 7%. Plans to raid Convention and Visitors Bureau funds from the same taxes to support REDI are already afoot, so someone has to make up the difference.

Hello, higher taxes on less powerful constituents.

Making the same argument EEZ/blight opponents have made: that the Columbia business environment is just fine, thank you, without all the City Hall tinkering, Columbia Hospitality Association (CHA) spokesperson Norm Benedict says "Columbia is a popular place to stay because of its central location -- and low lodging taxes."

CHA represents most of Columbia's 35 hotels, motels and bed & breakfast operations.

 

Raising the lodging tax will mean fewer occupants; fewer occupants mean lower revenues for retail business and less tax revenue for the city, Benedict explains. "If taxes are raised, Columbia’s competitive edge will be reduced, diminishing the impact that could come from events such as Roots ‘n Blues and the True/False Film Fest."

 

But hasn't all the talk out of City Hall been about improving Columbia's "competitive edge?" Are we, once again, only hearing that talk when it benefits a chosen few, the "Right People," as Columbia Tribune publisher Hank Waters calls them?

Those "Right People" have presided over a dizzying series of failures recently: the Youzeum, rescued by Columbia College; the Missouri Theatre, rescued by Mizzou, but not before stiffing a bunch of contractors; Tiger Town, greeted with jeers and protests by the businesses it would most affect; and at least three downtown TIFs. Two TIFs have never borne fruit, despite repeated extensions; one -- an Odle project -- completely shut down.

"A low lodging tax is a selling point for the hotels and the Convention & Visitors Bureau in attracting groups and conferences," Benedict reminds. "And although it’s anticipated that the University of Missouri’s entrance into the SEC will bring more people to Columbia, hotels and motels are not built on six or seven weekends a year."

 

How higher lodging taxes harm local Missouri economies, 1

How higher lodging taxes harm local Missouri economies, 2