The Charleston Metropolitan Transit System (CMTS) is facing an extreme financial crisis. Although federal subsidies make up some of the deficits not covered by fares, it is also necessary to cover some of the costs through local tax collections. For the past four years, these costs have been met through local sales and property taxes. Assume that your firm, Derrick Cheatham, and John, has been asked to serve as a consultant on future financing of CMTSs operating deficit. In that capacity, please answer the following questions.

a. What criteria would you recommend for judging alternative taxing mechanism for meeting CMTS deficits?

b. Using the criteria you have established in part (a) evaluate the current form of tax collections.