HOMETOWN MATTERS – WOULD ALLOW LOCAL GOVERNMENTS TO LEVY FOOD AND
BEVERAGE TAXES
What is Hometown Matters?
Hometown
Matters is the name given to the proposal by the Indiana Association
of Cities and Towns to allow local government financing options for
local projects and property tax relief. This proposal was
introduced last year but there was not enough time to debate the
issues. It will be introduced again in the next general assembly.
Governor Mitch Daniels has endorsed the concepts. Specifically
Hometown Matters would permit a county to impose any combination of
local supplemental income taxes, sales taxes, food and beverage
taxes, or innkeepers' taxes. The local food and beverage tax rate
adopted in a county would be
in addition to
any existing food and beverage taxes.
What does Hometown Matters mean to me?
Unfortunately – what ‘Hometown Matters’ does for local citizens by leaving taxing decisions to local governments – is raise the probability that they will be faced with ever-increasing taxes as local governments look to spend more money on projects, rather than curb spending. Local government could spend ANY portion of the money raised from additional taxes on property tax relief; the remaining portion could be spent in any way the local government would choose. Additional, there is no cap or sunsetting provision on the new taxes – meaning that the tax burden for local Hoosiers throughout Indiana never decreases. The local taxes raised would be in addition to any existing sales, lodging or food and beverage taxes.
Should basic necessities be taxed?
The Restaurant & Hospitality Association of Indiana believes that necessities such as food, shelter and medicine should not be subject to the sales tax.
Family Meals Taxes are extremely
regressive because they tax a basic necessity of life that everyone, regardless of income, must find some way to include in their budget.
Family
Meals Taxes are often rationalized as a tax on non-residents or a
luxury tax. In
fact, residents pay most of a new tax.
Why is there a food & beverage tax to begin with?
Originally
family meals/food
and beverage taxes were introduced to fund a special project
generally related to tourism and benefiting the restaurant industry
indirectly. Now a family
meals/food and
beverage tax is seen as a painless way to fund local government
excesses. It is not really painless.
Where will the money be going?
Governor
Daniels has endorsed allowing local governments to introduce family
meals/food
and beverage taxes. When this
is added to existing family meals/ food
and beverage taxes, Marion County could go to a 3% restaurant tax
(9% combined with the regular sales tax) and a 15% hotel tax (21%
combined with the regular sales tax). Under the Governor's proposal
most of the new money would be dedicated to property tax reductions
and would not be used for any use related to the hospitality
industry such as tourism promotion or convention facilities.
How long will we have the food & beverage tax?
Most meals taxes in Indiana have contained a “sunset” provision that promises the tax will go away at some future point when the project to be funded is paid for. As of today none of the existing restaurant taxes have
ever been sunsetted. In Indianapolis, Evansville,
Fort Wayne and New Castle the tax has been extended for new projects instead of
honoring the sunset provision.
Wouldn’t it be refreshing if these promises were kept?
In The Press:
THE LIBERTARIAN PARTY OF INDIANA: IACT's "Hometown Matters" Creates Hometown Masters
CHRONICLE-TRIBUNE.COM: 1% tax could be coming: Officials look for new ways to generate money
INDYSTAR.COM: State lawmakers face 3 challenges
SALEM NEWS: More local taxes won't save anyone money
WISHTV8: Mayor's Proposed Bill Bives Cities New Taxing Authority
REPORTER-TIMES: Eye on the Pie: Mirror, mirror which is the fairest tax of all?
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