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Factbox-What is the special tax designation Disney might lose? -Breaking

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© Reuters. FILEPHOTO: The entrance to Walt Disney World’s Magic Kingdom is manned by security officers, which was taken in Orlando on June 13, 2016. REUTERS/Barbara Liston/File Photograph

Maria Caspani & Dawn Chmielewski

(Reuters) – A Florida bill would abolish the tax district which gives Walt the extra income. Disney (NYSE:) Co was granted the authority to manage its theme parks. On Thursday, lawmakers approved the bill and sent it to Governor Ron DeSantis to be signed.

Disney was granted this designation, which allows the company to have control over the surrounding area, including Walt Disney World. This includes an assortment of hotels, theme parks and entertainment venues.

This is the Disney situation:

WHAT IS THE SPECIAL-TAXING DISTRICT AND WHY HAS IT BEEN SET UP.

To promote development of Walt Disney World, the Florida State legislature established the Reedy Creek Improvement District (representing 38.5 square miles of land that is mainly pasture or swamp) in Central Florida in 1967.

WHAT BENEFITS DOES A SPECIAL-TAX DISTRICT GIVE TO DISNEY TODAY?

Disney pays taxes in two counties that its resort is located, Orange and Osceola. In turn, the district provides services including emergency medical and fire services as well as water and wastewater treatment. They can also issue municipal bonds for infrastructure financing, which has tax benefits.

The arrangement allows Disney to control municipal services, and gives it autonomy in how land is developed and used. It also exempts it from certain regulations.

WHAT IS THE BEST WAY TO DISSOLVE THE DISTRICT IMAGING DISNEY? WILL THE COMPANY HAVE to PAY MORE TXES or will the PARK be more expensive to operate?

In 2021, Walt Disney World spent $780.3 Million in local and state taxes. The company would lose the ability to finance municipal bonds that provide tax benefits, and the district could be dissolved. It’s unclear what that would mean for Disney’s operating costs.

FLORIDA COUNTIES, TAX PAYERS AND WHAT IS THE IMPACT? IS IT AVAILABLE TO DISNEY RESOLVE THE MOVE

It is possible that the legislation will increase Orange and Osceola’s tax burden. Residents would need to pay for all services Disney has paid for, such as roads and fire service, and they might also have to shoulder the cost of the new law. A $58million debt service bill might fall on their shoulders.

WHY DOES THE FLORIDA GOVERNOR AND THE REPUBLICAN-CONTROLLED LEGISLATURE WANT TO DISMANTLE THE DISTRICT?

This is the end of an ongoing feud between Disney and DeSantis. DeSantis began attacking Disney in response to legislation banning classroom discussions of gender identity or sexual orientation in primary schools of the state and also prohibiting teachings that are “not appropriate for age” for secondary grades.

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