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home : opinion : opinion May 29, 2016

4/14/2013 6:00:00 AM
Column: Sales tax sales pitch needs polish

Alan Choate
News Editor

Correction: This article has been updated because of incorrect tax figures cited in an earlier version.

The Kingman City Council has its hands full as it grapples with proposed sales tax changes to deal with a continuing slide in city revenues and the need to fund basic services such as police, fire and roads.

In fact, they'd probably rather face the Bridge of Death from "Monty Python and the Holy Grail," since usually the Bridgekeeper only asked easy questions. And even if they get one of the five - er, three - questions wrong, they'd be in the Gorge of Eternal Peril, which is probably not as scary as facing angry taxpayers.

What's proposed is either a .5 or .65 percent increase in the city of Kingman's sales tax (paired with a 1 percent reduction in the bar and restaurant tax and perhaps a $2 reduction in the water base rate). A 1 percent state sales tax is set to expire, so Kingman's rate could end up being 8.5 percent or 8.35 percent - lower, but still higher than rates in Lake Havasu City and Bullhead City. Clark County in Nevada has a maximum sales tax rate of 8.1 percent.

No one likes taxes. Sometimes you can rally support for them if enough people agree that an increase or change will do something tangibly good, such as improve roads or build a school. Asking for more money just to maintain existing services, though, is almost always a non-starter, although city leaders should be commended for at least looking at all the options available to them.

It's worth exploring whether the higher rate would lead shoppers to skip Kingman altogether.

Let's take a big-ticket item I've been eyeing for a while (and most likely will just keep on eyeing, unfortunately): I've seen a promotion for a Nikon D5100 16.2 megapixel digital SLR with an 18-55mm lens for $599.99. I could also go for the D3200 24.2 megapixel version for the same price, but available only online; the sales tax would apply either way.

The promotion includes discounts on a Nikon SB-910 flash and a 55-200 mm lens. If I'm doing the math right, the total would come to $1,199.93. This particular retailer is in Bullhead City and not in Kingman, but I'm sure I could find comparable products and prices here.

The sales tax under existing rates would be $106.19. Under the new rates, it would be $101.99 or $100.19 in Kingman. In Bullhead City, I could expect to pay around $95, saving about $6.

Given that Bullhead City is about an 80-mile round trip from Kingman, the cost of gasoline makes this particular trip for one item not worth it. But I could easily see people opting to make a day of it in Bullhead City and Laughlin, or even Las Vegas, where shopping options outstrip Kingman. In fact, I'm sure people already do, and they'll use a higher sales tax as further justification.

Even if the dollars and cents of gas used vs. sales taxes saved doesn't precisely line up, there's an emotional satisfaction that people would get - and Kingman loses revenue the city's counting on.

Of course, there are also costs to losing city services. With fewer police, neighborhoods can be less safe, and that lowers property values. If fire protection doesn't meet certain standards, insurance rates can go up. Poorly maintained roads and parks make the city less attractive to businesses looking at expanding into new places.

There's always a case to be made for investing in our communities. I do not envy the City Council's task here, but if they show what this tax change would do - and follow through with the plan - some of the public rancor will subside.

And council members, if you instead choose to face the Monty Python Bridge of Death, remember: The capital of Assyria is Assur.

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Reader Comments

Posted: Monday, April 15, 2013
Article comment by: Anson's Nephew

�� and Obama wants his 'chained CPI' (start worrying whenever Government invents a new term), meaning your annual increases will be next to nothing.�

Actually the �Chained CPI� concept was first introduced by the Republicans and pushed heavily by Lil Ayn Ryan and Willard the Money Hider.

I feel that Obama is simply calling out the Republicans on their own plan.

Posted: Monday, April 15, 2013
Article comment by: you all just don't ge it .....

Thousands live on Social Security, whose CPI has been raising around 1% annually lately, and Obama wants his 'chained CPI' (start worrying whenever Government invents a new term), meaning your annual increases will be next to nothing. Then we have local Government which hardly blinks at raising taxes by more than that every year. It won't even be a matter choice. People will spend less at the retail level. Period. There goes business. There goes quality of life (there's something about being old, alone or relatively alone and so 'confined' at home, and on top of this, unable to afford those occasional trips out the door to go eat and shop. Do you get it now? You must do what all of us will have to do - cut expenses! (And to 'Doing Research', this obviously takes in raising property taxes, as well!)

Posted: Monday, April 15, 2013
Article comment by: Resident Joe

Wow, I have been told many time that the local paper has it out for County and City politics and never believed it until the last few months. I don't know if Mr. Choate really does not know the numbers or if he purposely wrote the wrong information. The city is looking at doing this when the State's one cent goes away. THERE WILL BE A NET DECREASE IN OUR TAXES. It may not be the whole 1% we were expecting but it will go down. It is NOT going to be 9.35% or 9.5% it will be 8.35 or 8.5. The city's portion of that is only 2.5% or 2.65% (if they raise it). Come on, who edits this paper? Do you not care to send out truthful information or are you trying to make the city look worse?

Posted: Sunday, April 14, 2013
Article comment by: Doing Research

The main problem here is that the city council has done zero research into how an economist would handle this. They're attempting to do what on paper seems like the Libertarian/personal freedoms way to do this, by raising sales tax. You have to participate in the system to pay the tax, unlike property taxes.

Unfortunately for Kingman most other cities have figured these things out:

1) When funding pubic goods, like fire and police, you need to collect equally across the board from a stable source, like property taxes. Get over it.

2) Sales tax increases have a limit to how much they can bring in. I highly doubt they had even an undergrad econ student do a study to find the maximum rate of sales tax that can be charged before you get diminishing returns. Instead you have people who want to keep their elected office guessing, and doing so poorly.

3) Sales taxes are contingent on the economy, which is still lousy in AZ. So you're hitching your wagon to a sick mule....why?

If the city council knew what was good for them they'd pimp themselves out to any AZ or CA university and let a class of MPA, MPP, and Econ grad/phd students do a practicum to overhaul all these stupid band-aids. Other cities do that all the time and they get benefits from it.

Proverbs 13:10 Pride only breeds quarrels, but wisdom is found in those who take advice.

Posted: Sunday, April 14, 2013
Article comment by: Michael Reddin

Don't have an opinion yet regarding the possible tax increase since I'm relatively new to the Kingman area. I do have an opinion regarding your column. It's one of your better ones: very readable, touch of humor (Wow, reference to Monty Python!), great illustration with the camera purchase (I've been a Nikon fan for years, both daughters use the D5100, but, check out Canon's new T4i I've now been "Canonized." Call me if you want to take a look at my T4i and info regarding source to order on line.), and, you are correct about the rational for shopping big ticket items in other cities.

Posted: Sunday, April 14, 2013
Article comment by: David Rogers

Thanks Alan for your candor,

Kingman's problems are not new. With the lack of experience and knowledge this town will deteriorate as many other small Arizona towns have. Your young will leave to prosper in towns like Vegas and Phoenix. The tipping point has passed.

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