Grappling the tax issue
Sunday, April 25, 2004 9:15 AM PDT
Tami Hart Argus Observer ONTARIO
After three City Council work sessions and countless hours of discussion and study, the Ontario City Council continues to grapple with the complex task of how to administer and structure a proposed 1 percent sales tax in Ontario. Ultimately, whether the tax passes or not will be decided by the voters on the November ballot.
The proposed 1 percent tax was developed as a way to pump revenue into the city's budget, which is looking at a shortfall of $900,000 between the general and public works funds in the 2005 budget year. Several key city services, such as the aquatic center and the public library could face the budget-cutting ax if new revenues are not developed.
Revenue raised from the sales tax would be used to fund the costs of administering and collecting the tax, to shore up the city's contingency fund, provide property tax relief to Ontario residents and to pump money back into the city services.
As discussed by the City Council, the proposed 1 percent tax would be assessed on all one-time retail purchases made in Ontario, with no limit as to the amount of the purchase. Originally, the council considered imposing a limit on taxing purchases more than $1,000 which would collect, at the maximum, $10 from a customer.
There will be no tax imposed on services and products purchased for resale will be exempt from the tax. Other exemptions include prescription medications, fuel and auto sales and certain agricultural purchases, such as farm equipment valued at more than $1,000 and fertilizers, chemicals and animal feed and seed for farm use.
The council studied Idaho's sales tax structure and exemptions and tried to mirror it as closely as possible.
"We need to keep it simple," councilman Lonny Hytrek said at the Tuesday work session. "The simpler it is, the easier it is to audit."
The council also believed property tax relief to Ontario residents in return for their share of the proposed sales tax would help the voters be more accepting of the tax.
At Friday's work session, the council crunched the numbers as they looked at a spreadsheet which outlined how much revenue would be generated, where it would used and what effect it would have on Ontario residents' property taxes. The council is considering property tax relief of 10 percent.
The council's original plans for the proposed sales tax included a heavy voter education program as well as a survey to find out what revenue options Ontario residents would support before placing the tax issue on the November ballot. After consulting with various experts on systems development charges, Ontario City Manager Scott Trainor said during Tuesday's work session the experts were concerned the timeframe would be too short to mount an effective information campaign.
Ontario Mayor LeRoy Cammack said Tuesday he did not see a reason to do a public survey because there were no alternatives to the proposed sales tax.
Trainor said he saw the survey as a tool to measure what the community would support.
"You take the high road when you take it to the voters," Trainor said.
The council and the budget committee begin 2005 budget meetings Monday.
