Snowmass wrestles with its high sales tax
December 1, 2008
SNOWMASS VILLAGE ” As a nationwide recession comes even to the Roaring Fork Valley, the Town of Snowmass Village faces a Catch-22-type conundrum.
Should it lower its 2.5 percent marketing and special events tax at a time when resorts are competing especially hard for travelers?
Or should the town leave its marketing tax alone ” and live with a sales tax that creeps over the 10 percent threshold?
At the request of concerned council members, the question has been scheduled for discussion at Monday’s 4 p.m. Town Council meeting.
Until now, sales tax in Snowmass Village has been held at 9.9 percent out of concern that a sales tax of more than 10 percent would drive shoppers to purchase goods elsewhere.
However, two successful measures on the November ballot ” a .4 percent Roaring Fork Transportation Authority tax to improve service and a .1 percent Pitkin County tax to protect water ” will soon push the town tax to 10.4 percent.
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The increase will make the tax on goods sold in town one of the highest among major resort towns, according to a memo from Snowmass Finance Director Marianne Rakowski.
Rakowski added that taxes on rental homes, condominiums and hotel rooms in Snowmass Village ” padded by an additional 2.4 percent lodging tax ” will now be the highest of those in any major resort area. The most obvious way to bring Snowmass sales tax below 10 percent again would be for the council to pass an ordinance reducing the town’s marketing and special events tax. Currently, sales tax in the town is comprised of a 2.9 percent state tax, a 3.5 percent Pitkin County tax, a 1 percent general-fund tax and the 2.5 percent marketing and special events tax.
However, before scheduling the question for Monday’s Town Council meeting, the town sought a legal opinion from attorney Gerald Dahl on the council’s legal authority to lower the voter-approved tax.
In a letter to Rakowski, Dahl said he believes the council has the authority to lower the tax without going to the voters.
“The fact that the voters approved the tax does not mean, unless the ballot measure requires otherwise, that the council cannot choose to collect less than the authorized amount,” he wrote. “I assume there will be political support in the community for the reduction.”
However, Dahl strongly recommended the council adopt a temporary decrease in the marketing tax, with a set expiration date. He pointed out the temporary decrease could always be extended with another ordinance.
According to Dahl, a temporary decrease has many benefits ” the greatest of which is strengthening the council’s authority to reinstate the full 2.5 percent marketing tax at a later date without holding a townwide election.
A tax that is reinstated upon the expiration of a temporary decrease arguably would not be a “new” tax increase, Dahl contends. Under the state amendment known as the Taxpayers’ Bill of Rights, or TABOR, any new tax increases must be approved by voters.