Transparent tax

Plans for how the money generated by a special sales tax will be spent should be in place before that tax is levied.

January 7, 2011


It long ago was resolved that taxation without representation won’t work in this country. Hopefully, Lawrence city commissioners soon will make it clear that taxation without a plan won’t fly either.

City commissioners once again are preparing to take up the often-controversial subject of special taxing districts. Developers are seeking a “Community Improvement District” that would allow an extra 1 percent sales tax to be charged on purchases made at four businesses near 23rd Street and Ousdahl Road.

That proposal has been before commissioners since August. They correctly have not moved forward in creating the district because they want more details about how the special 1 percent tax will be used. The state law allows developers to use the tax for public and private improvements at the site. The Mission-based development group has submitted specific plans for how the money will be used at three of the four business sites — a Jimmy John’s sandwich shop, a Yokohama Sushi restaurant, and a former Kwik Shop store. However, specific plans have not been presented for the fourth and largest site, the Hobby Lobby store, which probably also will be the largest tax generator of the four.

In August, commissioners told developers to bring back more details about how the tax dollars would be used at the Hobby Lobby location. This month, the developers came back but not with a specific plan. They say Hobby Lobby isn’t ready to commit to any specific improvements but the developers are confident improvements — everything from stormwater to building projects — will occur sometime in the future. In the meantime, they are suggesting that the special tax be charged at the Hobby Lobby site and the proceeds placed in an escrow account that won’t be spent until a specific plan is approved by city commissioners.

We would suggest something else: Let’s put the plan before the tax, not the tax before the plan.

It would be a poor precedent for commissioners to allow a business to charge consumers this special tax without having a detailed budget for how the money will be spent. The chance of problems occurring down the line seems significant with such an arrangement.

That would be particularly unfortunate because — although no one likes to pay an extra tax — such special taxing districts will deserve serious consideration from city leaders in the future, if the city wants retail to be a major part of our economic base.

As we move forward, we should always remember that a special tax requires what should be the most routine principle of government actions: transparency.


usesomesense 7 years, 3 months ago

This whole idea of having a special sales tax is complete NONSENSE.

First of all, if an area (like the one on 23rd street) is an issue of blight (which would be hard to argue since only one building is unoccupied) then a concession for property tax could be made to help developers improve the property.

A completely new area of development should have NO concessions whatsoever - since building new retail while we have retail space that is vacant an in disrepair only expands the problem. The only exception to this would be if a significant of new and/or high quality jobs are produced. Once again - this should be property tax relief.

The notion of taxpayers footing the bill for commercial development projects with the hopes that sales tax revenues will eventually pay for it is rediculous.

If a developer doesn't think they can afford to build the project they shouldn't build it. Why do we as taxpayers need to take the risk on with them? Nobody asked me to invest, and I sure as heck will never get a check if or when the project becomes profitable.

I would suggest that if this is really a good idea, the developer for the project should just put a clause in their lease telling the lessor that they must give the developer 1% of gross sales as part of rent. That's really what they're doing - except the city gets to be the 'bad guy' that's asking for the 1% and we all get to pay (as taxpayers) directly for it and the city has to handle distribution of the funds.

Furthermore; there is no incentive for a developer to have tenants that even collect sales tax. If a retail space is occupied by a Florist for example that delivers 99% of what they sell that sales tax is destination based and therefore only subject to the sales tax rate where the flowers are actually delivered. This is of no consequence to the developer, but the city never gets paid back if we footed the bill for infrastructure improvements.

The City and county need to get out of the development business and stay out of it. Let developers figure out if the project will fly or not. Vacant farmland is NOT and eyesore.

If retail properties become a blight issue then condemn them. If they need improvements give them a property tax break to do so.

jafs 7 years, 3 months ago

Good points.

Also, if people are willing to spend a little more at that location, the businesses can just charge a little more for their products and services - it's much more transparent, and makes more sense.

If they're not, then the extra tax will discourage customers, and it won't work.

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