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Show Sales tax increase faces city Vernal City will not benefit from recent re-cent sales tax legislation but may enact the increase anyway to protect its present sales tax revenue. At the present time, the law allows a local sales tax of up to three-fourths of one percent. Recent legislation allows local entities to increase it an eighth percent through June 30, 1987 and another eighth percent to retire a state bond issue over the next four years. After July 1, 1987, local units may levy the full one-fourth percent. The interesting part of the bill is that in final form the local tax increase is optional rather than mandatory. If a local unit chooses to increase its local option sales tax (from three-fourths three-fourths to seven-eights) and to a total of 1 percent in 1987, it must agree to the new method of allocating the local tax. This includes a gradual phasing in of a population factor until 50 per-' per-' cent of the tax is allocated by population popula-tion and 50 percent by point-of-sale. Any local unit that chooses to increase in-crease its local sales tax and accepts the new way of allocating the tax is assured that it will never receive less than it would have received from the three-fourths collected within its boundaries. If all local units decide to raise their local sales tax by one-eighth percent and accept the new allocating formula, an additional $13.9 million in local sales taxes will be imposed by next year. Another $13.9 million per year will be levied by the state to retire $43 million bond issue over the next four years. Some governments will receive more money from the new sales tax legislature, others will not. Vernal. Price, Roosevelt, Ballard, Altamont, Green River, Brian Head. Alta, Murray, Mur-ray, South Salt Lake and Park City will not benefit if they chose to increase in-crease their sales tax. Their increase will go to "bedroom communities" in the state that have a large population, but little commercial base. So why increase the local sales tax if your city isn't going to benefit? Mayor Ted Wilson, Salt Lake City, said that Salt Lake should take its lumps, because not increasing the sales tax could lead to bigger lumps later. Wilson is recommending the local sales tax go from three-quarters of a percent to seven-eighths of a percent even though his city won't benefit from the increase. During the 1983-84 fiscal year, which starts July 1, the new tax will bring in about $3 million from Salt . Lake City merchants. "The incentive is based on the simple sim-ple political fact that the suburban cities have the votes in the legislature to shift the sales tax distribution formula for-mula from point of sale toward distribution by population," Wilson said. Continued on page 12 Sales tax... Continued from page 1 If the Vernal City Council decides to increase it's local sales tax, $400,663 will be generated by the increase, but all of the increase will be redistributed. But the city will continue con-tinue to receive sales tax revenue as if it levied three-fourths a percent as it presently does because of a no-loss clause in the legislation. Vernal City Manager Kenneth Bassett told the Vernal council Wednesday that a decision to not increase in-crease their sales tax could create an outcry from other cities that have decided to increase theirs. Uintah County would benefit from the tax increase by $181,711 in 1984. Local entities, if they decide to increase in-crease their sales tax, must make the decision by June 1, 1983. |