Tomorrow the Wichita City Council will decide whether to grant the owners of Eastgate shopping center a Community Improvement District (CID). Granting the CID would force the merchants in the district to collect tax of an additional one cent per dollar sales from customers. These proceeds, less a small handling fee, would then be given to the center’s owners.
There are many reasons why the council should not form the CID. Perhaps the primary reason is that it lets property owners establish their own private taxing policy for their exclusive benefit. This goes against the grain of the way taxes are usually thought of. Generally, we use taxation as a way to pay for services that everyone benefits from, and from which we can’t exclude people. An example would be police protection. Everyone benefits from being safe, and we can’t exclude people from participating in — benefiting from — police protection.
So when we pay property tax or sales tax, many are comforted knowing that much of it goes towards things like police and fire protection. (Of course, some is wasted, and government is not the only way these services, especially education, could be provided.)
But CIDs allow taxes to be collected for the benefit of one specific entity. This goes against the principle of broad-based taxation to pay for an array of services for everyone. But in this case, the people who benefit from the CID are quite easy to identify: the property owners in the district.
CID advocates and council members make the case that CID taxes are good for the economy. It’s just another tool. But it’s a tool that has to be tapped with a velvet hammer. When people are armed beforehand with knowledge of taxes, they may alter their behavior and not shop at merchants located with CIDs. The council’s refusal to require signage that lets shoppers easily know, in advance, of taxes they’ll be paying recognizes that fact.
The council members should also be aware that when Wichitans have to spend more when shopping at certain merchants, it leaves less money to spend at other merchants.
There one was a time when if landlords wanted to make improvements to their property, they would pay for it themselves. Or they might raise their rents. These days of private enterprise are coming to an end as government is used to accomplish what private transactions and agreements once did.
As CIDs start to spread across Wichita, it’s likely the pace of requests for more will accelerate. After Eastgate spruces up, what are the owners of Towne East Square, located catty-corner, to do? Why wouldn’t they want their own CID too? And so it goes, on and on, until most of our major shopping districts are located within CIDs.
In this way the city will have experienced a sales tax increase, except that the usual recipient of tax revenue won’t be receiving it. And the usual recipient — government — will still be hungry.