March 13, 1996 in City

Local-Option Tax Not A Good Option

By The Spokesman-Review
 

Lobbyists for Kootenai County, Coeur d’Alene and Post Falls are selling snake oil as they push the Idaho Legislature to approve a local-option sales tax. They claim it would provide property tax relief while forcing tourists to help pay for roads, police and parks.

But a local-option tax is, at best, a break-even proposition for middle-class homeowners. It also means big property tax savings for Kootenai County’s richest - and a soaking for the poor and the elderly.

Rather than seek a regressive shift in taxes, local officials should continue to press for a fair distribution of state sales and liquor taxes. Outdated funding formulas have cost Kootenai County millions of dollars.

They also should press for full state funding of North Idaho College, one of only two two-year programs statewide supported by local property taxes. State funding of NIC would mean $5.5 million in local tax relief.

The local-option bill would authorize Kootenai County governments to ask voters to impose an unspecified sales tax. At least half the new revenue would have to go to property tax relief.

An additional penny of sales tax would raise about $12 million. If 75 percent of the revenue went to property tax relief, a family earning $35,000 annually would pay about $124 in additional sales taxes while realizing an estimated property tax break of $125. The poor and elderly would spend $100 extra each year on sales taxes but get little or no property tax relief.

Meanwhile, estimates vary widely on how much tourists would contribute to the new revenue stream - from 9 percent to 35 percent. Some believe a sales tax misses most of Kootenai County’s visitors - regional day-trippers who come not so much for shopping as for sightseeing and recreation on Lake Coeur d’Alene.

The sales tax, however, would hit Kootenai County residents 24 hours a day, year-round.

A higher Kootenai County sales tax won’t chase much business off to Spokane, which has an 8.1 percent sales tax. But merchants who sell big-ticket items such as automobiles could lose business to other North Idaho counties such as Bonner and Shoshone. Kootenai County also could face a double whammy if the Legislature raises the state sales tax a penny or more to completely fund the public school system.

A local-option sales tax would force residents to underwrite Kootenai County’s tourism industry year-round. A hotel tax, imposed in resort areas such as Sun Valley, Idaho, and Whitefish, Mont., would target tourists better.

, DataTimes The following fields overflowed: CREDIT = D.F. Oliveria/For the editorial board


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