One potential revenue source that the City of Atlanta could consider implementing is a tourism tax. A tourism tax is a type of tax that is levied on activities or services that are commonly utilized by tourists, such as hotel stays, rental cars, or entertainment venues. The principle of taxation is to ensure fairness and to generate revenue for the government to provide public services. A tourism tax would be a fair tax as it would be levied only on those who are visiting the city and utilizing its services. Moreover, it would generate revenue for the city to improve infrastructure, support local businesses, and attract more tourists.
In Atlanta, the tourism industry is a major contributor to the economy, generating over $16 billion annually. Therefore, a tourism tax could be a substantial revenue source for the city.
To implement this tax, the City of Atlanta would need to work with the state legislature to pass a law authorizing the city to collect a tourism tax. The tax could be structured as a percentage of the cost of a hotel stay, rental car, or entertainment venue ticket. The percentage rate could be set based on the expected impact on tourists and the revenue generation goals of the city. Additionally, the City of Atlanta would need to work with tourism-related businesses and stakeholders to ensure they are aware of the tax and its purpose. This would require clear communication and a well-crafted marketing campaign to ensure that visitors understand the importance of the tax and the benefits it will provide for the city.
The City of Atlanta’s Current Revenue Structure
The city of Atlanta relies heavily on property taxes; in fact, they make up 41% of the city’s overall revenue. Real estate within city limits is subject to property taxes, the amount of which is determined by the property’s assessed value. Fifteen percent of Atlanta’s annual budget comes from sales taxes levied on purchases made within the municipal limits. In addition to the 4% sales tax levied by the state, the city charges an additional 1%. Ten percent of the city’s overall revenue comes from intergovernmental transfers from the federal and state governments. These resources are put to use in a variety of municipal initiatives.
Fees for services include things like license and permit fees, fines, and regular things like rubbish collection and water supply. Nine percent of the city’s income comes from these fees. Utilities and telecommunications firms pay franchise fees to obtain access to public rights-of-way for the purpose of installing and maintaining their infrastructure. Four percent of the city’s budget comes from franchise fees. Money can also be brought in through gifts, investment returns, and transfers from other accounts. About 10% of the city’s overall income comes from these sources.
Newness and Political Feasibility
The new idea is a tourism tax, which would be levied on activities or services that are commonly utilized by tourists visiting the City of Atlanta. Specifically, the tax could be structured as a percentage of the cost of hotel stays, rental cars, or entertainment venues. The feasibility of implementing a tourism tax would depend on various factors, including the political climate and support for the tax among elected officials and the public. While a tourism tax is a fair tax as it would only be levied on those who are visiting the city and utilizing its services, it may face some challenges in gaining political support. In terms of the tax rate, it would be necessary to strike a balance between generating enough revenue to support the city’s needs and avoiding a rate that would discourage tourism. One potential tax rate could be 5%, which is in line with rates in other cities that have implemented similar taxes.
Reasonable Revenue
It is reasonable to expect that a tourism tax in the City of Atlanta could generate a significant amount of revenue. According to the Atlanta Convention & Visitors Bureau, Atlanta welcomed 57.9 million visitors in 2019, who spent a total of $16.8 billion in the city (Cooper & Alderman, 2020). Assuming a tax rate of 5%, a tourism tax could have generated up to $840 million in revenue annually.
The administration costs of implementing a tourism tax would likely depend on the specific structure and implementation of the tax. The City of Atlanta would need to establish a system for collecting and monitoring the tax, which could require some initial investment in technology and staffing. However, the costs of administering the tax could be offset by the revenue generated from it. In addition, the revenue generated from a tourism tax could be used to fund infrastructure and services that benefit both residents and tourists. For example, revenue could be invested in improvements to public transportation, parks, and cultural institutions. These investments could help attract more visitors to the city and create a positive cycle of economic growth and development.
Potential Impact
One potential issue with a tourism tax is that it could be regressive, meaning that it may disproportionately affect lower-income individuals who may be more likely to use lower-cost hotels and entertainment options. If the tax is not structured in a progressive way, it could result in placing a higher burden on those who can least afford it. However, the regressive nature of the tax could be mitigated by designing it to exempt certain groups or types of services that are used primarily by lower-income individuals. For example, the tax could exempt budget hotels or public transportation. Alternatively, the revenue generated from the tax could be used to fund social programs that benefit lower-income residents, such as affordable housing or healthcare.
Reference
Cooper, J. A., & Alderman, D. H. (2020). Cancelling March Madness exposes opportunities for a more sustainable sports tourism economy. Tourism Geographies, 22(3), 525-535.