Local Economic Development: Importance of Sales Tax and Other Factors
Public opposition is determined by the political climate of a given city and how reactive residents are to certain types of development and taxation. Truth-in-Taxation has played a large role in keeping property taxes down in Utah. Therefore, given the political atmosphere, it is unlikely that cities would be able to shift primary tax dependence from sales tax back to property tax. This could potentially have the effect of promoting “zoning for dollars” in cities where the sales tax comprises the largest portion of their budget, compared with cities where the property tax is the largest source of city revenue. Cities want to provide necessary services, but they also want to keep their tax-paying residents happy. This report’s research review indicates that citizens are more willing to approve sales tax increases than property tax increases. The incremental nature of the sales tax can seem less burdensome to taxpayers and is therefore more politically feasible to elected officials.
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