Real Effects of Non-Streamlined Sales Tax Administration: Evidence from the Florida Hotel Industry

64 Pages Posted: 25 Apr 2024

See all articles by Jennifer L. Brown

Jennifer L. Brown

Arizona State University (ASU) - W.P. Carey School of Business

Pablo Casas-Arce

Arizona State University (ASU) - W.P. Carey School of Business

David G. Kenchington

Arizona State University (ASU) - School of Accountancy

Roger M. White

Arizona State University (ASU) - School of Accountancy

Date Written: April 19, 2024

Abstract

We examine whether local administration of sales taxes (as opposed to more streamlined state administration) affects the real economy for businesses complying with the tax. We study this question in the Florida hotel industry, as counties in Florida can choose to locally administer the county-level tourist tax or have the state administer the county-level tax along with the state-level tourist tax. Local administration is popular because it supports local employment (of tax administrators) and provides more stringent enforcement on non-commercial operators (e.g., private rentals). State administration, however, has fewer compliance costs for hotels (e.g., reduced filings, fewer audits). Commentary from the profession suggests the incremental compliance costs of local administration can be considerable. We find that counties switching from state to local administration of tourist taxes predicts slower growth in aggregate hotel payroll and employment, consistent with local tax administration increasing compliance costs to the point that affected businesses cut other services.

Keywords: tax administration, sales tax, consumption tax, tax complexity

JEL Classification: H11, H21, H25, H71, K34

Suggested Citation

Brown, Jennifer L. and Casas-Arce, Pablo and Kenchington, David G. and White, Roger M., Real Effects of Non-Streamlined Sales Tax Administration: Evidence from the Florida Hotel Industry (April 19, 2024). Available at SSRN: https://ssrn.com/abstract=4801055 or http://dx.doi.org/10.2139/ssrn.4801055

Jennifer L. Brown

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States
(480)965-6618 (Phone)
(480) 965-8392 (Fax)

Pablo Casas-Arce

Arizona State University (ASU) - W.P. Carey School of Business ( email )

Tempe, AZ 85287-3706
United States

David G. Kenchington

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

Roger M. White (Contact Author)

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

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