Friday, November 15, 2013

Watchdog the tax

    Supermajorities in Sun Valley, Ketchum and Hailey have now approved a 1% increase in the resort cities’ local option sales tax. The increase is to be used to guarantee minimum revenues to commercial airlines with seasonal service to the area, which brings in visitors—the area’s most precious commodity.
    High hopes of greater visitor numbers that should result in a stronger local economy are pinned to the higher tax. The tax will double in Ketchum, which sees the highest total revenue from the tax. That makes it doubly important to ensure that the tax collection is consistent and fair.
    Ketchum agreed in May to pay the Idaho State Tax Commission for three years to oversee and monitor LOT collections. The commission has many more means at its disposal to effectively collect taxes due than the city does.
     Mayor Randy Hall broke a tie vote on the City Council to enable the action, citing an audit that had shown that the city had difficulty collecting taxes from high-risk businesses, including those with large amounts of cash or Internet sales, and those in construction or the vacation rental industry. The audit estimated that the city could collect up to $500,000 a year in taxes that were simply not being paid.
    The agreement can be canceled with 60 days notice.
    Newly elected Ketchum Mayor Nina Jonas, who was on the City Council, opposed the agreement because she didn’t trust the numbers in the audit.
    The newly approved increase in the tax makes it even more important that the tax is collected on every item on which it’s levied. It remains to be seen if the new mayor and council will revisit the contract. In pursuit of tax fairness and maximization of revenue, they should let the contract stand, complete the experiment and re-evaluate the tax commission’s effectiveness in three years when the contract ends.

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