Reasons to oppose increase in local sales tax | ParkRecord.com

Reasons to oppose increase in local sales tax

Bill McCullough, Park City

The Park City Council and Park City Alliance advocate the .5% increase in our local sales tax by saying it’s a "small increase" and it will benefit capital improvement projects and/or open space acquisition. The additional sales tax is estimated to generate $3.2 million annually.

What could also be said is that they are asking for a permanent sales tax increase that will make the local sales tax rate 7.95%, or about 25% higher than the sales tax rate of 6.35% in Kimball Junction. The local sales tax rate is already 7.45% and includes a 1.1% resort tax that generates $7 million annually.

Having a much higher sales tax rate that locals pay all year is detrimental to both residents and local businesses. It is also a possible economic reason to not "Buy Local" in Park City. Further, a sales tax is a relatively regressive form of tax — it is more burdensome to lower-income residents and elderly on a fixed income. In a 2009 Chamber of Commerce study, the present resort sales tax was estimated to cost resident families approximately $270 annually. With the proposed .5% increase, the burden would become nearly $400 per year. If more tax revenue is truly essential, a better taxing vehicle would be the Transient Room Tax, which impacts our lodging guests, not local residents and businesses.

It is also important to consider that the city hasn’t informed the voters how much is truly needed and what specific projects are contemplated and why they can’t reprioritize the present city budget to accomplish such compelling needs. While our city does a fine job providing fire and police protection along with other traditional municipal services, many residents question the level of city spending in other "nonessential" areas. And such concerns make voters apprehensive about approving an additional $3 million annually. Adding to these concerns is the language in City Council’s resolution that the additional tax is to be used "for but not limited" to these capital projects.

Voters might feel differently if council had laid out its case by saying it has reworked its budget and still needs a certain amount to get a compelling project done, clearly stating the particulars of the project, its cost, and why it will benefit our guests as well as local residents and businesses. They could then advocate imposing a Transient Room Tax and, if necessary, increasing the sales tax rate for two or three years to accomplish that project. But this proposal is permanent it does not "sunset" at a future date. And while it is not clear how much is truly needed now, it is even less clear why it need be permanent.

All residents want our resort community to thrive and remain vibrant. But this tax increase proposal is flawed and untimely. I encourage Park City voters to study this proposal, read the voter information pamphlet, and vote against the city’s tax increase in our upcoming election. If defeated, the city can always rework its analysis and possibly fashion a different, more compelling proposal in 2013 or beyond.