Wednesday, April 10, 2013

Enforcing LOT is a matter of fairness

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By RANDY HALL and BAIRD GOURLAY

The Ketchum community enjoys an exceptional quality of life made possible in part by high-caliber services such as fire and police protection, parks and recreation services and maintenance of our streets. The local option tax plays an essential part in the city of Ketchum’s ability to provide those outstanding services to our residents. Ketchum voters first approved the local option tax in 1978. Since then, the tax has been reapproved multiple times. The most recent was in 2011 when an overwhelming 73 percent of voters approved it for another 15-year term. The local option tax is important because it relieves taxpaying residents from supporting services necessary for our tourist economy.

An audit done by an outside accounting firm in 2011 identified significant noncompliance issues and found a high rate of errors in calculating the tax. It’s estimated that as much as half a million dollars in local option taxes is not being reported. While the city has attempted to collect the tax, enforce compliance and encourage accurate calculations by businesses, we simply don’t have sufficient legislative authority to be tax enforcers, nor do we have the staffing to calculate accuracy and compliance.

Let us be clear: A lack of compliance by our tax-paying businesses doesn’t imply that they are somehow being deliberately negligent or ill-willed. In many instances, it may be a simple oversight. Regardless, our voters have spoken in support of a local option tax. It is our duty, as Ketchum’s elected mayor and City Council president, to enforce not only the wishes of the people, but also the law. Improving compliance with the tax will level the playing field for businesses in our community and avoid putting compliant businesses at a competitive disadvantage. It’s a matter of fairness.

After attempting multiple internal efforts to enforce the local option tax over the years and considering possible alternative solutions, we believe the most effective method of enforcement is to contract with the Idaho State Tax Commission. Therefore, at the May 6 City Council meeting, we will be voting on whether to contract local option sales tax collection and enforcement with the Idaho State Tax Commission. This contract will represent about 8 to 11 percent of annual local option tax collections. Not only will this ensure the tax is applied and enforced fairly, it will also continue to support the high-quality services and exceptional quality of life that Ketchum enjoys.

We strongly believe that these costs are justified because:

- The enforcement of our local option tax meets the overwhelming request of voters to impose such a tax.

- Application of the tax to all businesses is a matter of fairness between those who are meeting the collection and reporting requirements and those who haven’t done so.

- Finally, and perhaps most importantly, we believe that we will see an impressive return on our investment when accountability with the law is increased.

With the Tax Commission contracting its services, it’s estimated that we will collect much of the nearly half a million in local option taxes that are currently not being reported. That’s reason enough for us to vote for enforcement of a law our citizens support.

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Randy Hall is mayor of Ketchum and Baird Gourlay is City Council president.

 

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