Julia Conte
Staff Writer
The Wyoming Senate passed House Bill 0047, which was regarded as a “complicated” process, in terms of imposing municipal taxes, by District 25 Senator Cale Case.
“This tax will need approval from the voters of that area and can be as high as 1%,” said Pawan Jain, an assistant professor of finance at the University of Wyoming.
The tax bill would alter rules regarding local sales and use taxes in reference to a municipality’s ability to levy a tax that goes above the fifth and sixth penny taxes that are imposed state-wide.
“[The] state of Wyoming has a state sales tax rate of 4%. In addition, the counties are allowed to add 1% to the sales tax collected, post voter approval. This is the ‘fifth penny’ tax which increases the sales tax rate from 4% to 5%. Once approved, this tax is generally in place for four years, which can be renewed in the future. ‘Sixth penny’ tax is additional tax added on top of 5% state and county taxes. This tax also requires county voter approvals. This tax is designed to fund specific projects and the revenue from this tax cannot be used for any other purposes. Generally, prior to approval of the “sixth penny” tax, the specific project(s) and a dollar amount are identified and once the target is met, this tax cannot be continued to be collected,” said Jain.
Both taxes are a necessary evil in terms of supporting the state of Wyoming and making sure local governments have enough funding to keep their communities afloat, and make improvements for their residents.
Larry Hicks, District 11 Senator, had an inquiry about the effects HB0047 would have on the state’s direct distribution model.
A direct distribution model is the process which involves transporting goods to consumers directly. The model consists of the producer supplying their products to the consumer, without any interceder, using their own modes of transportation. Wyoming’s direct distribution model brings in about $105 million to local governments in terms of state funding.
Concern arose when considering the new tax bill might affect the state’s direct distribution model. Case said he believed the Wyoming Association of Municipalities had some reservation in regards to HB0047 in terms of how it might affect the direct distribution model. He said there was no connection between the bill and the $105 million revenue generated from the model.
The bill would also allow counties to make the fifth penny “tax permanent,” making it so governing bodies would not have to ask voters to support the tax come election time.
District 22 Senator Dave Kinskey brought attention to the fact that there are already statutes that allow counties to impose a “permanent” fifth penny sales and use tax.
During a general election, voters must be asked on the ballot whether or not they would like to renew the fifth penny tax, however, “an exception under existing rules allows county commissioners to pass a resolution to continue the tax without asking voters to renew if at least half of the governing bodies of municipalities in the county adopt ordinances along similar lines,” according to Oil City.
House District 32 Representative Tim Hallinan proposed an amendment that would have removed a county’s ability to make tax laws permanent without putting it on the ballot for voters, however the House did not approve of his suggestion.
HB0047 would make it so municipalities would be able to impose taxes that go farther than just the fifth and sixth penny taxes.
“The state has, thus far, successfully operated without a state income tax. This has helped [in regards to] attracting and retaining wealthy residents and promot[ing] spending and investments across (the) state. However, in order to fund the expenses, [the] state has imposed the sales tax. Unlike income tax, in general, the revenue from sales tax is more stable and is also easier to understand from the taxpayer standpoint,” said Jain.
Case said Wyoming is experiencing a decrease in tax revenue generated from minerals, like coal, and that the state needs to make up this lost money somehow.
