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Archive for Sunday, July 22, 1990

2 GROUPS OFTEN AT ODDS FAVOR SALES TAX BOOST

July 22, 1990

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A vote on a proposal to increase the sales tax in Lawrence has the support of two organizations that have often held opposing views on local political issues.

The sales tax proposal, which will be voted on Aug. 7, is backed by the board of the Lawrence Chamber of Commerce and the leadership council from the Lawrence Association of Neighborhoods.

The city is proposing an increase in the local sales tax rate to a full penny on each dollar of purchases. Voter approval of the increase, combined with the 4 percent state tax on sales, would bring the total rate to 5 percent on purchases made in the city.

Proceeds from the increase have been earmarked by the city for the addition of 27 police officers and nine firefighters, with the majority of the remainder going toward property tax relief.

No organized effort against the sales tax increase has surfaced, although some Lawrence car dealers have said the proposal is likely to hurt their business.

The two camps that have often been at odds on other local issues are on the same side this time, citing the need to add to police and fire protection in the city.

"YOU KNOW, the neighborhoods have been pushing for more police and fire (service) for years now. Here's the plan and where the money's going to go, and we're for it," said Steve Lopes, a neighborhood activist and past president of LAN, an umbrella group representing neighborhood associations from throughout the city.

John Lungstrum, who chairs the chamber's executive board, is sending out a letter to the chamber's membership this week endorsing the proposal.

"None of us are excited about paying higher taxes," Lungstrum said. "Nevertheless, in order to preserve and enhance the quality of life which we all enjoy in our community, (the) board believes that it is important that this sales tax measure pass."

Dale Willey, who has the local Pontiac-Cadillac dealership, said he doesn't have any doubt that the city needs to add to its police and fire service. But he's opposed to the idea of increasing the local sales tax to pay for additions.

BECAUSE SHAWNEE, Johnson, Wyandotte and Franklin counties all have local sales taxes at least percent higher than is charged in Lawrence, local car dealers make a number of sales to customers from outside the county, he said.

"You talk a half percent sales tax savings on a $15,000 to $30,000 automobile, you're talking significant savings," Willey said.

The sales tax already generated for Lawrence by those car sales to out-of-county residents shouldn't be sneezed at, he said. Over the past 12 months, he said, 43 percent of his sales have been to out-of-county buyers. Other dealers, he said, reported similar sales.

"Everybody wins in that situation: The city picks up percent from people they ordinarily wouldn't receive money from; the customer, the buyer, gets a lower tax rate; and the local business sells another car," Willey said.

Yet, Willey is a realist and knows that the money for local government services has to come from somewhere. His suggestion: He wants to see the Kansas Legislature raise the statewide sales tax with the increased proceeds sent back to cities and, at the same time, eliminate the local option sales taxes.

"I'M JUST afraid if this passes we're shooting ourselves in the foot," he said of the half-cent proposal.

Lopes said he understands the car dealers' concerns.

"A half-percent on a $15,000 car is a significant amount of change, but it's still within their wiggle room," Lopes said. "It may drive away a few people, but I don't think a whole lot. Otherwise, I don't think it's going to change the buying practices of most people."

Lopes said his biggest worry about the sales tax any sales tax for that matter is its regressive nature. Critics of sales taxes say they place a heavier burden on low-income residents, who spend the majority of their money on consumer goods subject to the tax.

But in this case, Lopes said, he has to take a broader approach, one that includes taxing those who escape property taxes but still use the city's services.

"I'm very much opposed to regressive taxes, but you've got to look at the big picture in Lawrence," Lopes explained. "We have an awful lot of folks who shop here and who are nine-month visitors here. As a year-round resident here, I see nothing wrong with having those people carry their fair share of the tax burden, and the best way to do it is through a sales tax.

"Since the money is earmarked police and fire with the surplus going for property tax relief I see it as a win-win situation. We shoot ourselves in the foot by not voting for it."

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