There's been a lot of debate, no pun intended, about Herman Cain's 9-9-9 plan. Cain claims his plan is a bold solution to kick-start our economy and create jobs. His plan would institute a 9 percent business flat tax, 9 percent individual flat tax and a 9 percent national sales tax in place of the current federal income tax. Cain advocates that it is fair, neutral, transparent, and efficient.
With regard to the third nine, I think many of Florida's hospitality business owners may disagree with him.
Cain proposes to add, add being the key word, a 9 percent sales tax to each sale, admission charge, hotel stay, meal, and purchase of goods made by visitors and residents. This 9 percent sales tax would be added to Florida's existing 6 percent general sales tax on top of the price of the taxable goods and services collected at the time of sale. In other words, under Cain's plan visitors and residents will pay a minimum of 15 percent in taxes on every transaction, not to mention gratuities.
But it doesn't stop there. Current state law authorizes five separate but important tourist development taxes on lodging, which is defined broadly. Depending on a county's classification, the maximum tax rate varies from a minimum of three to a maximum of six percent. Those revenues go to capital construction of tourist-related facilities, tourist promotion, and the beach and shoreline maintenance necessary to maintain the beauty of our Sunshine State.
Furthermore, on hotel stays, some visitors are also charged necessary convention development taxes which can be as high as 3 percent as well as local option food and beverage taxes of up to 3 percent on the sale of food, beverages, and alcoholic drinks in hotels and motels.
In other words, Cain's fair and streamlined 9-9-9 plan could result in a family visiting Florida paying up to 27 percent sales tax on their hotel stay. That is $270.00 per thousand dollars spent. Add to that the 15 percent sales tax (6 percent Florida + 9 percent Cain) that will apply to their meals (breakfast, lunch, and dinner), park passes to visit the Mouse, transportation, fuel, souvenirs, and sunscreen! And please don't forget to add a tip.
In 2010, during the worst year of the global economic recession, Florida's hospitality industry employed over 974,000 individuals, hosted more than 82 million visitors from the U.S. and abroad, and generated over $62.7 billion dollars in tourism spending. With the other sectors of our state's economy leading the nation for the wrong reasons, we cannot afford to lose any of that business due to Cain's national sales tax.
Finally, yes I'm going there - when tourism opens in Cuba, Florida is going to have to do everything it can to keep our visitors coming back. Paying a third of their travel budget on taxes is going keep our guests away and will cast a shadow on our sunshine.
Luis Andre Gazitua is a lawyer and government affairs counsel. He is a board member of Greater Miami Convention & Visitors Bureau - the official sales and marketing organization for Greater Miami and the Beaches.
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