For the week of April 30 - May 6, 2003

Sales tax hike may be ‘hard to swallow’

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Information about Idaho’s new 6 percent sales and use tax rate is available on the Idaho State Tax Commission’s Web site at www2.state.id.us/tax or on the state of Idaho’s home page at www.state.id.us . Click on the "New Sales/Use Tax Rate!" link on either site to find a question and answer section that deals with the rate increase. The link also leads to a new 6 percent rate bracket chart, which is designed to help retailers determine how much tax to charge on sales.

Retailers and others with questions about the sales and use tax rate increase can also call the Tax Commission at 1-800-972-7660.

The law also changes the use tax rate to 6 percent on items first used in Idaho on or after May 1, if sales tax was not paid when the item was purchased and no exemption applies.

The Tax Commission sent rate increase information and 6 percent rate bracket charts to more than 51,000 retailers over the weekend.

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By GREGORY FOLEY
Express Staff Writer

Starting Thursday, Wood River Valley residents and visitors can expect to pay a little more for just about everything, from fishing flies to French fries.

Gov. Dirk Kempthorne signed a law Friday, April 25, that raises Idaho’s sales tax from 5 percent to 6 percent, beginning May 1.

The increase is expected to raise about $160 million, more that three-fourths of the estimated $200 million shortfall expected in the 2003-2004 budget. It was passed after weeks of bitter debate among lawmakers in a record long legislative session.

The new law means retail businesses all over the state will rush to change their cash registers and computers to meet the May 1 deadline.

Bart Davis, partner in Backwoods Mountain Sports in Ketchum, said administering the change will not be difficult.

"For us, it’s going to be easy," he said. "We’ll just change one screen on the computer and it’s done."

However, Davis said he believes the tax hike could have a negative effect on business, particularly because most local businesses in Ketchum and Sun Valley charge local-option taxes in addition to the state sales tax.

"Certainly, it will affect business," he said. "Taxes are going to go up to 7 percent in Ketchum. That’s getting up there. I think we’ll have some customers who might consider it, especially when making larger purchases."

Overall, the sales tax increase will bring taxes on retail sales in Ketchum—including a 1 percent LOT—to 7 percent. In Sun Valley, taxes on retail sales—including a 3 percent LOT—will jump from 8 percent to 9 percent.

For lodging, taxes will increase from 9 percent to 10 percent in Ketchum, including a 2 percent LOT and a 2 percent state "bed tax." In Sun Valley, lodging taxes will increase from 10 percent to 11 percent, including a 3 percent LOT and the state bed tax.

Carol Waller, executive director of the Ketchum-Sun Valley Chamber and Visitors Bureau, said the state sales tax increase could be hard on local businesses, many of whom are already suffering from a below-average winter season. "I think the one thing that everybody is surprised with is that it was so soon," Waller said. "Unfortunately, it is coming on the heels of a rather soft year."

Waller said the tax hike is "hard to swallow" for many local businesses that have been fighting the negative impacts of a lagging economy and overall downturn in travel for the last two years.

However, she said, overall, she did not expect the increase to inflict significant damage to the local economy.

The tax-increase legislation started out as a half-penny increase in the House but was increased to one cent in the Senate.

(The Associated Press contributed to this report.)

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.