Because temporary taxes have the tendency to become permanent taxes once the tax proponents have their foot in the door. Case in point, my hometown of Minot which raised the sales tax 1% in order to fund a water project and now wants to keep the tax for “other purposes.”
Minot voters may be asked in June to extend a city sales tax for property-tax relief, infrastructure and community facilities.
A group of Minot residents asked the Minot City Council’s Finance and Improvements Committee Tuesday to redirect the 1-cent tax for the Northwest Area Water Supply project to other uses once the water project no longer needs the income. NAWS could be fully funded as soon as the end of this year, eliminating the need for the sales tax, they said.
Former mayor Orlin Backes, former alderman Dean Somerville and former city manager Bob Schempp, chairman of the NAWS Advisory Committee, represented a group of 15 people who developed a plan that they feel presents the best use of money from a revised sales tax. Voters instituted the NAWS tax in 1999, and the group proposes voters decide whether to continue it for other uses.
“We have a community that’s growing and the burden of keeping up with the needs of the community is now falling on the residents and the taxpayers,” Somerville said. “We have an opportunity today to keep our cureent 1-cent sales tax and provide property-tax relief and help fund our infrastructure needs.”
So when the citizens of Minot were convinced to support this tax originally, they were sold on the idea that it would be temporary. Now, it turns out it may not be so temporary after all. And it’s always easier to keep in place an already existing tax than to convince citizens of a new tax.
Minot is, absolutely, a growing community. And with that growth comes growing pains. There is spending that needs to be done. That being said, with Minot’s growth has come an even faster growth in economic activity (thanks, oil boom!), and the city has seen a spike in tax revenues.
The proponents of keeping this tax would have you believe that they need revenues to keep up with growth. That argument doesn’t quite hold water.
Going further, given a lot of Minot’s commerce these days has to do with the oil industry, it would behoove the city to seek a lower sales tax rate. Oil companies tend to order in bulk, and a 1% difference in the sales tax can mean a big difference. Businesses that could have been located in Minot may well locate outside of Minot, in other cities, to take advantage of lower tax rates.
The city doesn’t really need the revenues, and lowering the tax rate could make the city more competitive statewide with other communities.