Pair Of Proposals Make Tax Debate Far From Abstract

For 20 years, Idaho lawmakers have kept a jealous grip on local-option taxes, not granting cities and counties the power to let residents vote on them.

“That really says we’re not smart enough to decide what’s good for ourselves. It’s insulting,” said Post Falls Mayor Jim Hammond.

Legislators in southern Idaho long have argued that granting special taxing authority to one part of the state would lead to pressure from other communities for the same right.

Further, if lawmakers themselves want to raise sales taxes, they don’t want to compete with one or two counties’ optional sales taxes.

This week, these formerly abstract arguments could take form.

At the same time the House of Representatives debates Kootenai County’s special resort tax bill, lawmakers will consider raising sales tax statewide from 5 percent to 6-1/4 percent. The extra $144.5 million would replace property taxes used to fund public schools.

Hammond conceded that the general sales tax increase likely will change the debate over the local option tax in Kootenai County.

It could fuel concerns among people like J. Tim Brennan, director of the Idaho Retailers Association, who opposes optional taxes.

Brennan said a 1 percent optional tax would put Kootenai County stores at a disadvantage to those in neighboring areas.

“One area of the market would have to compete with lower sales tax in another,” he said.

Since retail competition primarily is with Spokane - where sales tax is 8.1 percent - few North Idaho officials see that as a real threat.

County Administrator Tom Taggart said some Coeur d’Alene car dealers might worry about losing customers to other Idaho cities - like Kellogg or Sandpoint. But dealerships would recoup their losses with the corresponding property tax break.

A statewide tax would change that, said Randy Nelson, president of Associated Taxpayers of Idaho.

“All of a sudden you could see Coeur d’Alene go from 5 percent sales tax to 7-1/4 percent,” Nelson said - a jump large enough to excite even some apathetic shoppers and residents.

But Hammond said legislators still should give voters a shot at optional taxes.

“They will raise our sales taxes if they want,” he said. But legislators tell residents “don’t you raise them on yourself.

“Well I think the people can make that decision,” Hammond said.

, DataTimes