By Pat Caldwell
VALE — Shoppers buying goods in Ontario will find a new item on their receipts starting in January – a sales tax.
The Ontario City Council unanimously approved the 1 percent sales tax last week. Businesses will have to start charging it come Jan. 1, a step that follows a year of debate and discussion by city officials, community leaders, and voters.
The tax is considered by the council as the best way to solve the city’s financial woes.
Ashland and Yachats are the only other Oregon cities with a sales tax. City officials expect the new tax to produce about $3 million each year. The point-of-sale tax is narrowly tailored to retail goods while vehicle sales and agriculture products are exempt.
Also products such as gasoline and tobacco, which are subject to state tax, will not be part of the proposed duty. Services will not be taxed. For example, if resident hires a local mechanic to repair a car, the work the mechanic completes will not be taxed but the parts used in the restoration will be.
“It’s a step in the right direction,” Adam Brown, Ontario city manager said.
Businesses will be responsible for collecting the tax but no funds would immediately go to the city.
Instead, businesses will keep the revenue until April, then pay the tax to city. Such payments will continue quarterly, similar to state business taxes.
Councilors aren’t locked into the rate, and can raise it again by majority decision of the council.
“They have expressed that they don’t want to go beyond 1 percent,” said Brown.
The city also will compensate businesses up to $1,000 for expenses to collect and transfer the tax.
The city must complete some initial groundwork to implement the tax. For example, the city will create all of the paperwork such as tax forms and educate merchants on the submission process.
The city also will expand its contract with Oster Professional Group, the Burns accounting firm that acts as Ontario’s finance department, to administer the tax collection. Brown said negotiations are still going about how much that will cost, though he said it would probably be around $50,000.
For many on the council the sales tax is a way to equalize the burden of cost for city services. Ontario, with a population of just over 11,000, serves people and communities in two states.
“This is the fairest way to generate the needed revenue by taxing the persons that use our services but do not live within our city limits,” said Councilor Marty Justus in an email to the Malheur Enterprise last week. The added money, Brown said, allows the city to hire more police officers and reopen the aquatic center.
Without the sales tax, Brown said, six city jobs would be lost and the Ontario Recreation Department could be scuttled.
Mayor Ron Verini said his vote for the tax was right.
“The voters elected me to make the right decisions and set the direction of our community. That is what I just did. It was not an easy decision to make but each year that I have been on the city council we have made drastic cuts in our services to the community just to stay even,” said Verini.
On the list of city services slashed over the years to save money are the golf course and the aquatic center. In another cost-saving move, the city also disbanded its public works department and hired CH2M, an engineering firm, to do the work.
“If our community fights this and it gets defeated, then the very people that shoot it down better be ready for a community that will suffer. We have a simple choice to increase revenue or cuts to services,” said Verini.
Councilor Dan Capron said one of his frustrations was the lack of comment from local residents on the tax.
“Nobody comes to the meetings. Everyone says there is waste in the budget. Where is the waste? They don’t show up at meetings, they don’t come and give us advice. They just tell us ‘no tax,’” said Capron.
Another criticism of the tax is that it was imposed without a public vote. Justus said voters elected the council to make tough decisions.
“The citizens of our city voted for each of us, thus giving us the power to make these kinds of votes. Each of us believes we are acting in the best interests of the city and the citizens of Ontario,” said Justus.
That some oppose the tax is no secret, Councilor Norm Crume said.
“We know some disagree with our method of moving forward. However they have the ability to sign a petition and say, ‘No, we don’t like your way of doing business,’” said Crume.
Rumors of an effort to repeal the tax through a referendum process on the ballot swirl in Ontario but so far no one has announced such a campaign. The tax could be referred to the May primary ballot if petitions with signatures from about 500 Ontario voters are collected.
“I know that we have done the right thing for our community in passing this and would be very disappointed to see this defeated. If that should happen the consequences of that defeat would be, I believe, devastating over the long term for our community,” said Verini.
Have a news tip? Contact reporter Pat Caldwell at [email protected] or 541-473-3377.
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