Kingwood Council discusses ways to increase revenue

KINGWOOD — Kingwood Council is debating the pros and cons of implementing a city sales tax.
Councilwoman Michelle Whetsell brought the proposal of a municipal sales tax to Tuesday’s meeting. She said state law changed last year to allow towns to implement the tax. So far 117 towns in the state have implemented the tax, which can be up to 1 percent.
Council has discussed ways to increase revenue in the past. Revenues from property tax went up only $3,000 this year.
“This 1 percent could generate some nice revenue for us,” Whetsell said.
The exact amount that could be collected is hard to calculate, she said, but Grafton collected $475,000 in 2017 from its 1 percent sales tax.
In order to impose the tax, council would have to prepare an ordinance, which must be approved by the state tax commissioner. After council passed the ordinance, it would have to determine which businesses are in town and would collect the tax.
That list would go to the state tax commissioner. The tax would be collected by the businesses, who would send it to the state with other sales tax they collect.
“And we would get a check every three months,” City Clerk Mary Howell said.
The state charges a fee for its part in the transaction. The tax also applies to online sales, if the seller knows that the product purchased is going to a Kingwood resident.
“This is not a tax on city residents but on anybody who uses our city. So it’s going to be people who come into town to purchase things, not just citizens,” Howell said.
Fuel is not covered by the tax, so it would not affect gas prices, Whetsell said.
Recorder Bill Robertson wondered if the tax would be better received if it were dedicated to certain uses. City attorney Sheila Williams cautioned against restricting the usage too much. Whetsell said the state leans more toward putting the tax money in the general fund and spending it where it is needed.
Among the city’s needs now are a street sweeper and, soon, a garbage truck, council has said. But this money could also help with street paving or if the pool needs something, Whetsell said.
“To me, it’s the most equitable tax because it’s based on what you spend and not on what you make,” Councilman Josh Fields said. “And it’s across the board for everybody. My concern is what affect it might have on small businesses in town.”
He expressed hesitancy to do anything that puts pressure on small businesses. Fields wondered how many people will drive out of town to Walmart if Kingwood implements the tax?
Robertson asked if a business and occupation tax — which Kingwood doesn’t have — wouldn’t be better. Mayor Jean Guillot said the sales tax is passed on. But if a business’s costs go up, their prices will go up, Robertson said.
“Sales tax is the only fair tax. Everybody pays it,” said Councilman Dick Shaffer. “It doesn’t increase businesses’ costs that much more.”
“This to me would be a great opportunity,” Whetsell said. “And it’s something that the state has pretty much said, ‘Here, we’re giving you small municipalities an opportunity.’”
The tax will be on the next council agenda for further discussion.