Friday Follies: Favors for ‘Motorsports Tourism’

WHAT MAKES STOCK CAR RACING SO SPECIAL?

Many cities across the country have what could be called a “stadium problem.” This problem occurs when a sports team – usually, but not always an NFL team – issues an ultimatum. Unless the franchise is given some form of preferential tax treatment, or the city issues new bonds for the construction/maintenance of stadium facilities, the team will go elsewhere. The implied threat is that, if the team goes elsewhere, the city will miss out on all of the associated tax revenue that comes from having a sports team in that location.

South Carolina has fallen victim to that line of thinking – not with an NFL team but with a NASCAR venue.

Consider H.4009. South Carolina state government, as SCPC’s Duncan Taylor has shown elsewhere, has a marked tendency to exempt more sales tax than it collects. H.4009 nicely illustrates why this is the case.

This bill would allow any company that engages in the repair, construction, or improvement of a motorsports complex to be granted an exemption from sales tax for the building materials, fixtures, and equipment that go into a motorsports complex. The company would be granted this exemption after applying for a permit from the Department of Parks, Recreation and Tourism (PRT). The bill also creates a separate fund within PRT for the awarding of grants or loans to promote “motorsports tourism” and related “hospitality projects.”

As with many such bills passed by the legislature, H.4009 raises this question: What’s so special about “motorsports tourism”? Why, in other words, should that industry get a sales tax break, but most other industries not get the break? The answer doesn’t have anything to do with the intrinsic worth of motorsports tourism – how could we know such a thing anyway? – but instead with that industry’s connections at the Statehouse.

The argument from lawmakers, of course, is that motorsports tourism is a big industry and “brings jobs” to the state. Why, though, would lawmakers reward the biggest industries and leave the smaller, struggling ones to pay the full amount in sales tax? Of course, nobody knows the real value of any one industry, and in any case singling out some for special benefits is intrinsically unfair and contributes to the atmosphere of cronyism throughout state government.

A better and fairer policy would be to scrap all the special benefits and lower the overall rate – for everyone.

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