PANAMA CITY — Short-term renters in Panama City can expect more taxes after the New Year.
Panama City commissioners on Tuesday approved the final reading of an ordinance to consolidate lodging services — hotels, motels, campgrounds and other short-term rentals — into the city’s existing 1% business tax. town.
The idea was presented at a commission meeting Sept. 27, and it’s reflected after Panama City Beach’s 1% business tax, according to Jared Jones, Panama City’s deputy city manager.
“We try to treat all businesses in Panama City the same,” Jones said of the tax expansion. “It just helps us treat these hoteliers and (short-term tenants) the same (as other business owners).”
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Information from Panama City says the ordinance went into effect immediately after Tuesday’s meeting, but the city won’t begin collecting the 1% lodging services tax until Jan. 1.
In addition to creating a fairer tax system for all businesses in Panama City, the ordinance also creates a level playing field between short-term renters in Panama City and Panama City Beach, where the 1% business tax is already charged. .
It also gives Panama City a broader tax base. Officials said such ordinances help keep property tax rates lower in the future by generating more money for the city’s general fund.
On September 27, the commissioners approved a property tax rate reduction that took effect at the start of fiscal year 2023 on October 1. The new rate of 4.7999 is slightly lower than the 2022 rate of 4.8999, but many homeowners will still see a slight increase in taxes paid. This is because the enacted rate was higher than the rollback rate, or the rate that would yield the same income as the previous year after taking into account the increase in home values.
“Part of the reason we looked at this … is to continue to reduce ad valorem and not rely on it as much,” Jones said. “That was the goal, and we have consistently reduced ad valorem (without sacrificing) any of our service delivery to our citizens.”