“Don’t tax you, don’t tax me, tax that man behind the tree.”
– Sen. Russell Long (D-LA)
This afternoon, we saw a glittering example of insider dealing and tourist-trap economics when the City of Gonzales, responding to a request by the people who run the Tanger Outlet Mall, agreed unanimously to bump the city’s sales tax from 8.5 percent to 9.5 percent on Tanger property.
“Oh hell no, we not raising the taxes,” that’s the honest answer from an out-of-town woman, who sometimes makes the trip to the Tanger Outlet Mall in Gonzales, to find a good deal.
To the dismay of shoppers we spoke to, officials at the outlet mall asked the city to approve a one percent sales tax increase for only their stores. However, Tanger employees say many of their tenants support the tax.
Tanger’s management wants to enhance the property, and bring in new tenants. In fact they say when one store closes, several are waiting to move in. Right now, they are short on vacant space.
The Gonzales City Council unanimously passed the one percent sales tax for stores at Tanger Outlet Tuesday afternoon.
“We want to make sure that people can get in and out easily because if you can’t access it, you’re not going to use it,” said Clay Stafford, Finance Director for the City of Gonzales.
Stafford says the city looks at the tax increase as a win-win. If approved, the current 8.5 percent sales tax would increase to 9.5 percent. Stafford says the city has been looking a way to fix Highway 30 and this would give them the money.
“Not just at Tanger, but looking down at interstate interchanges and further down Highway 30 making improvements,” said Stafford.
It seems that better than two-thirds of Tanger’s customers come from outside Ascension Parish, much less the city of Gonzales. So the city is essentially pillaging the pockets of Baton Rougeans, Kennerites, Metairieans and Houmans – and other visitors, to the tune of a 12-percent hike in sales taxes at Tanger in order to finance roads around the outlet mall.
Which sounds reasonable. Except the measure passed at the Gonzales city council wasn’t some temporary tax increase to finance a new entrance to the mall. It’s a permanent tax increase that will fund Lord-knows-what after that entrance is built.
And Tanger says they’re going to expand to put six or eight new stores in once that entrance is installed.
Maybe this is an economically sound strategy. Maybe the new stores will do well because traffic conditions getting in and out of Tanger will facilitate more customers.
Or maybe Tanger is pricing themselves out of the market, and using the Gonzales city council to do the dirty work for them. After all, there’s an outlet mall opening up in New Orleans soon. And while the mall in New Orleans East will be counting on crony-capitalist TIF (tax increment financing) treatment in an effort to enlist the City of New Orleans in assuming the economic risk of its construction, folks in Metairie and LaPlace and Mandeville might decide it’s closer and nicer and has better stores than Tanger does – and a 9.5 percent sales tax is outrageous. We don’t know what the sales tax at that new mall in New Orleans would be; in Orleans Parish the sales tax rate is 9 percent, and it would be hard to imagine setting up a special tax rate higher than what Tanger will have.
Of course, there’s another element to this – which is that you can buy stuff online without having to pay any sales tax. And if the city council and the folks at the mall are out to drill their wallets for as many tax dollars as they can find, it’s entirely possible the 70 percent of Tanger’s customers who don’t come from Ascension Parish might decide to save the time and gas money and just fire up the laptop to look for a new shirt. After all, they’ve just gotten a great indication of just how much they’re appreciated by Tanger and Gonzales; surely that goodwill offensive won’t go unrewarded as those consumers exercise their right to vote with their pocketbooks.
Most of all, though, it’s just bad form for politicians and real estate developers to be gouging hard-pressed consumers in the midst of a slow economy – particularly when they know most of the people they’ll be affecting don’t have the ability to participate in the political process that produced that tax hike. We ought to expect more than this.