A good policy in one city may not be the best option for another. Each type of local tax policy has been effective in providing a dedicated funding stream to arts organizations, but none would be effective in all cities. It is important to consider strengths and weaknesses for each tax policy along with the needs and limitations of your area.

The following questions are helpful in trying to determine which policy to pursue:

Is my city permitted by law to create an additional tax policy?
Cities, counties, and local governments are only permitted to do what is allowed by their state governments. Some states give cities more power than others. Some of the policies mentioned may not be allowed in your state. For example, some states do not allow cities to collect additional sales taxes.

Are additional tax policies already in place?
Many areas already have additional sales tax policies in place to generate revenue for the city or county. In addition, most library or park districts collect property taxes. If a policy already exists, it may be easier to adapt that policy to include the Arts, than to create a separate policy.

How does local government generate most of its revenue?
The methods used by local governments to generate revenue can vary widely from area to area. Generally, areas with strong business environments will collect a large portion of revenues from business taxes. Tourist destinations favor collecting money through hotel and sales taxes to decrease the burden on local residents. Small rural areas without much commercial activity often rely on property taxes. The additional art tax should be aligned with local existing tax policy.

Can the local economy support an additional tax?
When arts organizations benefit from additional tax policies, it requires those being taxed to pay more in taxes than they would without the tax. Before proceeding, determine whether the taxes in your area are already high, and if the public would support an additional tax. If the public doesn't favor additional taxation, a percent for art policy may be more successful than an additional tax.

Do potential partnerships exist?
Very rarely are the Arts the only beneficiaries of local public policy. Find out what is important to your community- such as tourism, economic development, arts education, neighborhood revitalization, historical preservation, or parks and recreation and try to align your interests with strategic community partners who could also benefit from a dedicated funding policy.

How much revenue can a tax be expected to raise?
This all depends on the type of tax, the amount of the tax, and how many organizations will split the tax revenues.

Who would the tax affect most?
Different taxes affect different groups of people. While sales and property taxes impact local residents, sales taxes also cover visitors, lessening the burden. Hotel taxes are primarily charged to visitors and tourists, but taxing visitors too much may deter visitors from visiting.

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