The proposed ambassadorial program Savannah Serves, which would put three teams of trained employees on downtown streets, was greeted enthusiastically by many last week, but we have a lot of questions here at City Talk.
Some of those questions deal with the funding mechanism. There are certain to be some serious objections as downtown residents, workers and businesses consider the long-term impacts of the 25-cent fee that would be added to most transactions over $5 within the to-go-cup zone.
We can call that quarter a “fee,” a “surcharge” or some other term, but the additional charge has the same effect as an increase in sales tax. The regressive nature of that tax means it will disproportionately impact consumers and businesses who engage in frequent small transactions.
Imagine the purchase of a $6 item. With our 7 percent sales tax, the total would be $6.42. Tack on the mandatory fee in the service area, and that $6 item is now $6.67.
That’s the equivalent of an 11 percent sales tax.
It’s probably correct that visitors would pay the bulk of the gross revenue, but consider the impact on those who live or work downtown and routinely shop or dine in the service area.
There are certainly households that make hundreds of purchases per year that would be subject to the proposed fee. There are certainly individual residents who make as many as 400 qualifying purchases annually. That’s $100 a year to Savannah Serves.
Also consider the accounting changes for businesses in the service area. Will owners be forced to update their point-of-sale systems? Will servers and cashiers add the fee manually?
How often will salespeople have to field awkward questions from customers about that extra quarter?
Some businesses also have priced their products so that tax is already included. Bars do this routinely. One nonprofit tourist site with which I’m familiar has priced merchandise in a similar way so there is no need to handle large amounts of change.
A key goal of Savannah Serves is to boost spending downtown, but the funding mechanism will be a drag on consumer spending. Would the proposed benefits outweigh the negative impacts?
There are also some obvious questions about the potential duplication of services. The program’s Green Team would be “responsible for maintenance, development, planning of beautification elements and the content improvement of the area aesthetic.”
The Blue Team would be “responsible for official law enforcement and compliance.”
These are functions currently handled by public employees. We are already paying taxes for those services. What guarantees will we have that public services will not be reduced?
City Talk appears every Sunday and Tuesday. Bill Dawers can be reached via billdawers@comcast.net. Send mail to 10 E. 32nd St., Savannah, GA 31401.