The rate elasticity of Florida tourist development (aka bed) taxes

Abstract

One aspect of taxation in Florida is unique in that state policymakers have created several different tourist development taxes, generally allowing local governments to adopt up to four of these ad valorem levies (which can total 5%) on transient rentals. The rentals include, but are not limited to, hotel stays. In this article, we estimate the elasticity of this local tax base with respect to the rate for Florida counties with rate changes between 1998 and 2012. Results indicate several significant and large short-term declines from periodic county-level increases in the tax rate, but no significant long-term effects.