B&O Tax Rate Clarified

Here is the responses from the town attorney to my question about the B&O tax rates. I am glad he was able to confirm that the rates are similar.

Karen:

The idea is indeed to bring our B and O taxes in line with Tacoma's. I hope nobody will read anything nefarious into this - if we are to survive as a Town we need to both cut spending and raise revenues; raising the B and O rate from one of the lowest in the state to something more on line with the surrounding area seemed fair, and will add much needed revenue to help keep us going.

As for the "direct multiplier," I'm not sure what is meant. All B and O tax rates are "multiples" of gross revenue. This is probably confusing because our old rate was tied to the state's B and O tax rate (10 percent of the state B and O rate), which was extremely low vis a vis other jurisdictions. You have to be careful to distingiush between the municipal rates and the much higher rate the state can charge.

Finally, please note that we did not replicate Tacoma's rate on services (I believe), which was .4 percent. This is higher than the maximum rate allowed under state law, but Tacoma had that rate in place prior to the passage of that law and is thus grandfathered in. We therefore went with .2 percent, which is the rate imposed for services by most of the B and O taxing jurisdictions.

Hope this helps.
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Karen -

I just read through your blog entries on the B and O tax increase. Please note that although you have characterized Ruston's rates as 10 times what Tacoma's are, this is not accurate and is certainly not our intent. If, for example, Tacoma's retail rate is .002, ours is .2 percent. This is of course the same thing. I don't want to cause confusion - we were merely using the same format (i.e., a perecentage of 1 percent of gross revenue rather than a straight percentage) to provide some continuity and (I had hoped) eliminate confusion.