Across our state, government at all levels strives to appear attractive to businesses and organizations that will bring jobs and economic prosperity to their jurisdictions. They cobble together creative, yet confusing, programs and policies to entice commerce to their communities.
The current round of incentivization apparently stems from the loss of redevelopment districts, and “creative” ideas were needed to keep the economic engine going. Unfortunately, subjective criteria can set the foundation for cronyism.
Several communities in our county have implemented sales tax rebate programs as an incentive program for select (e.g. “large”) businesses. Many programs are heavy on “if-then” clauses: If you meet this requirement, then you might qualify for that benefit.
What if I am an established business that followed the existing laws and fee schedules, then a new business is granted a rebate or exemption? The system that I have contributed to, and complied with, has put me at a disadvantage. My competitor may have gotten an advantage over my business; an advantage that was determined by the current political climate.
As an individual consumer, how do you feel about rebates? Having to get paperwork together, fill out applications and waiting for months to get the money back (maybe), then wondering who to contact when you’re curious about the status is aggravating. Compound that aggravation for a business owner who is unsure if they will get that rebate; one who may need that money for payroll or to purchase inventory.
If carrots are now being dangled to new or relocating businesses, existing businesses will be motivated to look elsewhere to grab their own carrots. If I am an aspiring business that wants to expand, it is potentially in my interest to wait and see what carrots assorted governments will throw at me. Additionally, if the carrots are getting bigger as time passes, I may hold off on my growth plans until the carrot is so juicy I would be crazy not to jump on it.
If an agency is collecting a tax, theoretically, it is to raise resources to provide benefit to the taxpayers of the community. For the agency to rebate some of it back to select entities casts doubt on the necessity of the tax in the first place. Moreover, this precedent validates that keeping money with the private sector is an incentive to starting and growing businesses. If so, why don’t we apply this logic universally, rather than maintaining a selective and subjective list that applies to a handful of well-connected organizations?
When a list of criteria is established that limits the number of participants in a program, there is motivation to update or alter the criteria to allow or prohibit certain participants from realizing benefits of that program. For most municipalities, these programs require city council approval. Knowing that it takes just three people to determine whether one qualifies for preferential treatment stokes the fires of politicking, lobbying and influence peddling.
I view government as a service provider. As with all service providers I deal with, I want the relationship to be smooth and uncomplicated. Likewise, the service provider should strive to be my easiest and most enjoyable partner. Businesses are focused on making a product or providing a service. A business owner should be utilizing their resources and bandwidth to improve their product or service, not expending additional resources to understand and comply with all the details of convoluted programs.
If we are after “creative” solutions to economic growth, let us try this one: Remove as many fees, permits, charges, taxes and other hurdles as possible that are not value-added. Any city fees and regulations are piled on top of many county and state fees and regulations. Allow the people to focus as much of their resources and energy on efficiently providing goods and services to the community.
Businesses (and people) fear one thing above all: uncertainty. Our government should strive to maintain a consistent and reliable playing field for all participants. To do otherwise frustrates the entrepreneurial spirit that drives our economy.
Brian Thiemer is chairman of the Solano County Libertarian Party. He can be reached at email@example.com.