City’s sales tax proposal could struggle at state
El Paso’s city council plans to ask the state to increase the amount of sales tax the city can charge, which would initially decrease the burden on property tax payers. But could such a measure really pass?
The city wants to keep more revenue from sales tax in El Paso. Right now, a t-shirt and paper towels costing $7.77 total comes with 59 cents in sales tax. The proposal would increase that about 7 cents.
Some state legislators said a measure like that could find it very difficult to gain traction in Austin.
“Communities like El Paso and others who want to take destiny into their own hands,” said State Sen. Jose Rodriguez. “Like in this case proposing a once cent sales tax increase face an uphill battle, because the attitude in the legislature is they don’t want to have any increase in taxes.”
The cap is currently 8.25 percent. The city gets to keep two cents of that tax. The proposal would give the city three cents total to keep in town.
Some city reps said as much as 30 to 40 percent of El Paso’s sales tax revenue comes from non-residents, but they weren’t able to say how they arrived at that number.
So currently for shoppers in El Paso, for each dollar they spend they can expect to pay about eight cents in sales tax. The city’s proposal to be approved by the state would increase that to about nine cents. This is supposed to support infrastructure projects, but not everyone believes that would happen.
“It’s been eight and a quarter for what, let’s say 20 years,” one El Paso man said. “And they don’t show accountability for what they ask for now.”
Others think that coupling the tax increase with a drop in property taxes could be a good tradeoff, as long as it’s used wisely.
“I always think property taxes are too high,” said another El Paso man. “I’m from California originally, and compared to out there, they’re actually pretty low. But I always hear everyone complaining about property taxes.”
The idea is to have a local vote to enact a sales tax hike, and coupling it with a property tax decrease could help it pass. But any tradeoff wouldn’t be permanent.
“Well, we can’t obligate future councils,” said Cortney Niland, district 8 city rep. “So there is no guarantee.”
The finalized city legislative priorities will be up for approval October 6th. The next Texas legislative session begins January 13th.
City staff did tell ABC-7 late Wednesday that Mayor Leeser based the 30 to 40 percent estimation on conversations with local retailers, and that the city has spoken with the federal reserve to identify a more solid percentage.
