Panama City short-term rentals will soon have to pay existing 1% business tax

Nathan Cobb, The News Herald
·2 min read

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 lump lodging services — hotels, motels, camp sites and other short-term rentals — into the city's existing 1% business tax.

The idea was introduced at a commission meeting Sept. 27, and it is mirrored after the 1% business tax of Panama City Beach, according to Jared Jones, assistant city manager of Panama City.

"We're trying to treat all businesses within the city of Panama City the same," Jones said of the tax expansion. "This just helps us treat those hoteliers and short-term (renters) the same (as other business owners)."

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Panama City Commissioners on Tuesday approved the final reading of an ordinance to lump lodging services into the city's existing 1% business tax.
Panama City Commissioners on Tuesday approved the final reading of an ordinance to lump lodging services into the city's existing 1% business tax.

Information from Panama City notes the ordinance immediately went into effect following Tuesday's meeting, but the city will not start collecting the 1% tax from lodging services until Jan. 1.

Along with creating a fairer tax system for all businesses in Panama City, the ordinance also creates an even playing field between short-term renters in Panama City and Panama City Beach, where the 1% business tax already is charged.

It also gives Panama City a larger tax base. Officials have said such ordinances help keep property tax rates lower in the future by generating more money for the city's general fund.

Commissioners on Sept. 27 approved a reduction in the property tax rate that went into effect at the start of the 2023 fiscal year on Oct. 1. The new rate of 4.7999 is slightly lower than the 2022 rate of 4.8999, but many homeowners will still see a small increase in the taxes paid. That's because the adopted rate was higher than the rollback rate, or the rate that would bring in the same revenue as the previous year after accounting for increasing home values.

"Part of the reason we looked at this ... is to continue to drive down ad valorem and not rely on that as heavily," Jones said. "That's been the goal, and we've been consistently driving ad valorem down (without sacrificing) any of our service delivery to our citizens."

This article originally appeared on The News Herald: Panama City short-term rentals will have to pay 1 percent business tax