Civic leaders in the Florida city of Orlando have voted to hike property taxes by nearly 18%.
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Orlando is a favourite sunshine destination of thousands of expats and holiday home owners from Britain and other European countries.
The tax increase of 17.7% is likely to lead to rising rental prices as home owners look to pass on the increase to tourists and long-term tenants.
Councillors voted unanimously for the increase as a last-ditch effort to avert financial crisis due to a shortfall in the city budget.
Property taxes last went up in 2008.
In recent years, Orlando’s council has dipped into cash reserves and cut jobs and services to balance the books.
Politicians blame each other
“We don’t like levying taxes, but we just can’t run the city like that,” said Mayor Buddy Dyer.
Homeowners will pay $6.65 per $1,000 of taxable property value.
For a typical apartment or house worth $200,000, the owner will have to fork out $997.50 in tax – $150 more than the current rate.
Orlando is not alone in raising property taxes in Florida – almost every other major city and town has done so at least twice in the past eight years.
Councillors blame the tax increase on the state’s central legislature, which has cut the amount of cash the council can spend on services.
“We have struggled to keep the rise as low as we can, but the numbers just do not work any other way,” said Dyer.
Several years of falling house prices have pushed down the taxable value of homes and businesses in Orlando.
In 2009, property tax raised $137 million, but as prices have fallen since and are still recovering, the higher tax rate will only realise $128 million.
Although the tax increase will help bridge the city’s budget gap of $32 million, councillors still need to cut costs by another $15 million to balance their accounts.
Florida is not the only state to look to raising property taxes to solve budget problems.
As prices recover across the nation, state politicians are opting to look to property owners to contribute more.
In a recent Organisation of Economic Cooperation and Development (OECD), the US ranked second from bottom in a tax comparison of the 34 member nations.
State property, fuel and purchase taxes were highlighted as stealth taxes on top of federal income taxes.
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