Savannah City Council is poised to consider a new “fee” that would add 25 cents to most sales tax eligible purchases over $10 in the busiest portions of downtown.
The revenue would fund Savannah Serves, an ambassadorial program that was created, according to the official website (http://www.savannahserves.com), “to enhance the downtown visitor and resident experience.”
We could debate the merits of the program, but it certainly has laudable goals of assisting visitors, beautifying downtown and providing more resources for public safety.
However, the proposed funding mechanism, which I have been covering off and on for the past three years, is problematic for a variety of reasons. I’m surprised that Mayor Eddie DeLoach, the aldermen and city staff are willing to risk the inevitable political backlash, especially coming so soon after hiking some downtown parking rates.
Proponents have dubbed the extra quarter as a “fee,” but it is in effect a flat sales tax. All sales taxes are regressive to some degree, but flat sales taxes are especially so.
If approved, most of the total revenue would be raised from tourists, but the tax would disproportionately impact locals who spend a lot of time in the Historic District.
The new tax would cost some downtown households a few hundred dollars per year. Low wage downtown workers would also be hit hard if they shop or dine anywhere in the service area.
Retailers would be permitted to keep a percentage of the revenue to cover bookkeeping costs, but small business owners will probably face more headaches than bigger enterprises with more sophisticated point-of-sale systems.
The added charge also sets up retail and service industry workers for freqent negative interactions with customers who question the extra charge.
Are there other ways of funding Savannah Serves? Of course there are. We have robust and increasing hotel tax collections. The city of Atlanta funds its ambassadorial program through commercial property taxes.
A couple years ago, I reached out to the Georgia Attorney General’s office about the constitutionality of the proposed tax, but officials would not comment. The state constitution gives local municipalities broad flexibility to impose fees, and that language is being used to justify the extra 25 cents.
Under this logic, local governments across the state could impose much larger transaction “fees” over much broader geographical areas as long as the revenue is serving the area in which the revenue is being collected.
City officials are hosting public meetings about the proposal at 10 a.m. and 6 p.m. on May 31 at the Savannah Civic Center. If you have strong feelings one way or the other, now is the time to make your voice heard.
City Talk appears every Sunday and Tuesday. Bill Dawers can be reached via firstname.lastname@example.org. Send mail to 10 E. 32nd St., Savannah, Ga. 31401.