Friday, February 20, 2009

Raising Taxes For CIB Could Hurt City's Convention Business

The IBJ's Scott Olson delivers a prescient story today on the impact of raising the City of Indianapolis' food and beverage tax and innkeepers tax to bail out the CIB's nearly $50 million budget shortfall in covering expenses for the Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center. Did you know that Indianapolis' innkeepers 16% tax rate is among the highest in the nation already? Look at this comparison:

  • Indianapolis--16%
  • Miami--13%
  • Las Vegas--9%

Our food and beverage tax of 9% is nothing to slouch at either. Another 6% tax is levied on car rentals. Collectively, those taxes raise more than $76 million annually in Marion County as follows:

  • Food & Beverage--$36.3 million
  • Innkeepers Tax--$36.2 million
  • Car Rental Tax--$4.6 million

A secret plan hatched by the Ballard administration and shared with state lawmakers would hike these taxes 1%, generating $18 million from the food and beverage tax and $2 million from the innkeepers tax, still short by millions of what the CIB says it needs to close its budget gap. The food and beverage tax was doubled and the other taxes increased to pay for the Lucas Oil Stadium. When taxpayers adopted the original 1% food and beverage tax for the original dome, they were told the tax would disappear once the stadium was paid off. Instead, the tax has been made permanent, and the dome had a debt equal to its original $70 million cost when it was imploded in December to make way for the expanded convention center.

A lobbyist for the hospitality industry, John Livengood, warns that tax increases could have a negative impact on the local tourism industry. “That’s the one that haunts me; that’s the one that keeps me up at night,” said Livengood, executive director of the Restaurant & Hospitality Association of Indiana. “It just boggles my mind. I don’t get it.” "Meeting planners who often consider taxes when seeking convention sites could be dissuaded by Indianapolis’ costs, argued Livengood, who hopes the CIB will seek alternatives such as a ticket tax," Olson writes. "And not just tourists are affected," he adds. "Anyone who dines out would pay more, and if residents stop eating out, local restaurants suffer."

"Only the little pay people pay taxes," New York hotelier Leona Hemsley once quipped before she was charged and convicted of tax evasion. When will the little people rise up and demand that the billionaire Simons and Irsay pay their share of the costs of having these sports palaces? Haven't you paid enough already?


M Theory said...

Still no one, but The People, has the kahunas to tell Ir$ay and $imon it is time to pay up?

Paul K. Ogden said...

I don't think it is a lack of "kahunas" but rather that the key people are in bed with Irsay and Simon.

Two additional comments. First the IBJ continues to kick the Star's ass when it comes to covering this issue. Second, the work Gary Welsh has done in continuing to expose what's going on with this corporate welfare nonsense is worthy of an award. His knowledge of the issues and tenancity in exposing what is going on makes him an enormous asset to the community.

Gary R. Welsh said...

Thanks, Paul. If you want to help taxpayers, you have to use your own money and time. If you want to screw taxpayers, the government will pay you as much as you need and then pat you on the back and declare you a good citizen. I sometimes wonder if it's worth the effort. There is an old story of a lady approaching Benjamin Franklin at the conclusion of the constitutional convention and asking him about what he and other delegates had to show for their efforts. He was said to have responded, "A republic, madam, if you can keep it." I fear that we have already lost our great republic. From the federal government down to the state and local level, our leaders have allowed themselves to be completely corrupted and have so warped the system in favor of an elite few that we're more like a banana republic than the democratic republic our founders created in 1787.

Anonymous said...

The answer to this is simple. The vast majority of those who use these facilities have money. They get government contracts, are high up executives, etc.. The simple solution to this is a 1-2% income tax on people who make more than $200K/year. That would include every single professional sports player, most the coaching staff, the executive management, and the team owners. It would also include all those VIP executives at Lilly, Anthem, Simon, etc...these people are always using these facilities to drive more business, meaning more money in their own bank accounts. It would also grab people like highly paid lawyers at law firms who are getting rich off these deals.

There are 53 Colts players listed on the roster. The league min. is around $250K. An additional 2% income tax on these quasi taxpayer subsidized employees would yield $265K/year. That is if every player only makes $250K/year, which we know that most make more than that. This tax alone could bring in close to a million dollars from just the Colts players..the people who benefit the most from the stadium. Throw in the Pacers, wealthy elites, and the ticket tax...that should help cover the costs.

M Theory said...

I concur. Gary's reporting is superb. I'm glad he's filled in where the media won't hit these issues hard enough.
There is a paypal link on Advance Indiana. I've contributed to Gary on a few instances, because I do not subscribe to the paper anymore.
For those of you who have cancelled your mainstream media subscriptions, please consider offering a tribute to Gary as thanks for the countless hours he devotes to keep us informed. He brings us hard hitting news every single day, and does so without a paycheck for it.

(And no, Gary didn't put me up to this!)