Evers’ plan lets some cities collect sales tax, increases county cap
Larger cities could collect a half-percent; counties could collect up to 1% under the plan.
MADISON, Wis. (WMTV) - A new proposal from Gov. Tony Evers would double the maximum amount counties can impose in sales taxes and let larger cities enact their own sales tax on top of that.
The plan is expected to be part of the governor’s biennial budget when it is unveiled on Tuesday.
“From the unexpected costs of the COVID-19 pandemic to the years of neglect and underfunding from the state, communities across Wisconsin have been under immense budgetary pressure, and they’ve been doing more with less for far too long,” said Gov. Evers.
Under his proposal, counties could impose up to a one percent sales tax on top of the five percent state sales tax. Right now, they are only allowed to collect a half-percent sales tax.
Additionally, any municipality with a population over 30,000 would be allowed to impose its own half-cent sales tax. That means residents in cities over that population floor, such as Madison, Beloit, and Janesville, could see their respective sales taxes climb as high as 6.5 percent. Local voters would have to approve any changes.
Groups representing local governments said the proposal gives voters another option. League of Wisconsin Municipalities Executive Director Jerry Deschane said it also starts a discussion.
“There have been a variety of local sales tax options proposed by Republicans and Democrats over the years. We believe this is the first time in recent memory that a governor has included one in his budget,” Deschane said.
Deschane said said municipalities rely heavily on property taxes for revenue and most cities do not have any sales tax.
“I would guess if that given a choice between a property tax increase referendum or a sales tax referendum, most voters would prefer the sales tax option . That spreads the burden out- it diversifies your tax base,” he said.
Both sales tax increases would have to be approved by referenda of their residents. The Evers administration argued the increase would allow the local governments to make critical investments in local roads, direct services, maintenance, and other services.
“Our proposal puts the question back in the hands of the folks best positioned to make decisions for their community—local leaders and the people who live there,” Evers added.
However, not all groups are on board with the idea of a tax increase. The Wisconsin Manufacturers & Commerce (WMC) executive vice president of government relations, Scott Manely, sent a statement in opposition to the proposal.
“Instead of having similar discussions about how to make government more efficient, this plan just takes more money from taxpayers at a time when they can least afford it,” he said.
The communications director with Dane Co. Executive Joe Parisi’s office, Ariana Vruwink, said they have no plans to put it on the ballot.
“For this option to exist, this measure would have to be approved by the state legislature, which is highly unlikely. Regardless, Dane County has no plans to seek this even on the slim chance it survives the legislature,” Vruwink said.
According to the Dept. of Revenue, only four counties, Manitowoc, Racine, Waukesha, and Winnebago, don’t impose their own local sales tax. The rest of the counties take advantage of the entire half-point allowance, most having done so for decades.
The Evers administration pointed out that even with the combined maximum local and state sales taxes, Wisconsin’s tax rate would be lower than several nearby states, particularly Indiana (7%), Minnesota (6.875%), and Illinois (6.25%). Iowa and Michigan currently impose a six percent tax.
Full list of cities with 30,000 residents as of 2010 (new proposal would use 2020 figures):
- Green Bay
- Eau Claire
- West Allis
- La Crosse
- Fond du Lac
- New Berlin
- Menomonee Falls
- Oak Creek
- West Bend
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