Ballot Proposition 1 --- Seventh-Cent Tax
Professor Robert Schuhmann of the UW Political Science Department provided this assessment of Ballot Proposition 1. The ballot language is “For” or “Against” the county sales and use tax.
Effective July 1, 2007 the Wyoming Legislature amended the Wyoming Statutes to increase the maximum sales tax that counties may impose from 2% to 3%; thus, allowing the “seventh penny” to emerge (see WS 39-15-204).
In addition to the state of Wyoming’s current four percent state sales tax, under these amended statutes Albany County may propose additional local taxes for a variety of uses. The county may impose a tax, not to exceed two percent, upon retail sales for the purpose of general revenue, and/or a tax not to exceed two percent for specific purposes, and/or a retail sales tax not to exceed one percent for economic development. The key is that the mix of these local taxes (general purpose, specific purpose, or economic development) may not exceed a total of three percent combined. Albany County currently levies a total of two percent – one percent is a general purpose tax and the other one percent is a specific purpose tax (the “fifth” and “sixth” pennies when added to the four pennies already levied by the state). Counties can also levy a lodging tax not to exceed four percent, which is not included in the 3% maximum.
Under the November 2008 ballot, Albany County seeks an optional seventh-cent (four cents for the state, three cents levied by the County), increasing their general purpose tax (GPT) from one percent to two percent, which is allowed under state law. If approved by the voters, the proceeds from this additional one-cent sales tax would be distributed among Rock River (approx. 1%), Albany County (approx. 14%), and Laramie (approx. 85%). This tax, like other general purpose sales taxes levied by local governments, would expire at the end of four years.
Although cities and counties are not required to pre-determine the use of the seventh penny general purpose tax, according to Laramie’s fact sheet, the city would earn approximately $4 million each year (a total of approximately $16 million) with that revenue to be used to pay for infrastructure improvements such as water and sewer line replacement and street maintenance and repair ($12 million), and the phase-in costs of operating the new Fire Station No. 3 ($4 million). Based on data from previous years, Albany County could expect to receive approximately $750,000 and Rock River $39,000 in each of the four years. Albany County anticipates splitting its portion among Road and Bridge (30%), Sheriff (30%), Library (20%), and Fairgrounds (20%). Rock River will spend its portion on water line replacements.
Excise taxes (or retail sales taxes) in general have several desirable features as part of a revenue system, particularly in their ability to generate considerable public revenue. Two features are particularly important in sales tax: uniformity and neutrality. Here, a tax meets the criteria of uniformity if it is applied equivalently across all consumption expenditures (meaning all types of consumer products). In terms of the neutrality standard, a tax is considered neutral if it does not create competitive disturbances among businesses (i.e., tax one type of business too much and another type of business too little). Retail sales taxes are, however, often considered to be “regressive.” Here, retail sales taxes tend to burden people most heavily who find themselves at or near the bottom of the economic ladder. In light of this, with the removal of the retail sales tax on groceries, Wyoming has made great strides toward taking the regressive “tilt” out of its sales tax system.