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Town council could ax retail rental tax
Written by Mark Lineberger   
Wednesday, 11 November 2009 13:35

The Camp Verde Town Council wants to help local merchants in this tough economy: It’s considering suspending a tax usually passed on to retail merchants that rent their space.

But the council isn’t sure that suspending the tax will make that much of a difference. It’s been poorly enforced, said Town Manager Michael Scannell, and there’s no immediate data on how much the town actually makes from the tax.

The town is planning to start vigorously enforcing its tax codes at the beginning of the new year. Councilman Pete Roulette said suspending the 2 percent tax might be one way to cut local merchants a break.

“Our merchants are already collecting sales taxes to give to the state which then gives it back to us,” Roulette said. “They don’t get any compensation for that. ... We talk a lot about helping local business, but I don’t really see a lot of ideas coming forward to do that.”

Local businessman George Young endorsed the idea of repealing or suspending the tax, arguing that it would create a more level playing field for businesses that rent and those that own their own locations. Young gave the hypothetical example of two shoe stores, one renting, one owning.

“If I owned [my business location], I’d have a 2 percent advantage right off the bat,” Young said.

It’s a case of being between a rock and a hard place for the town, said Councilwoman Jackie Baker. While suspending the tax might not make too much of a difference for any given business, Baker said she supported anything that helped provide some relief for local merchants.

“If this is a step, however small it might be, it is something to help our business community,” Baker said.

But the council wants to see hard numbers before making any concrete decisions. Councilwoman Carol German said she needs to know how much the town currently makes from the tax and how much it could expect to make once the tax laws are more vigorously enforced in 2010.

Town Attorney Bill Sims is also recommending the council wait until a current tax case before the Arizona Supreme Court is decided. While that case involves giving tax breaks to companies, similar to the deal Camp Verde has with Steve Coury for locating his car dealership in town, it could possibly have implications for how the local government treats its tax collection policies.

In the meantime, the council is waiting to obtain more data before ruling on the rental tax one way or another.

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