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AGENDA ITEM REVIEW FORM
5.E.
Regular City Council Meeting
Meeting Date:
06/08/2016
Department Head:
Kay Macuil
Submitted By:
Kay Macuil, City Attorney, Attorney's Office
Action Requested:
Motion

ITEM:

Discussion and possible action on any and all matters regarding a motion to deny adoption of Ordinance No. 354.  An ordinance related to the Tax Code of the City of San Luis relating to the use Tax Rate for Purchases of Tangible Personal Property. (Kay M. Macuil, City Attorney)

SUMMARY:

City Council passed Ordinance No. 348,  amending the San Luis Tax Code and  providing for a tiered sales tax rate of 1.5% on single items costing $2,500.00 or more while the sales tax on remaining items of lesser value have no change at 4%.  Ordinance No. 348 went into effect on June 1, 2016.
 

The Department of Revenue required technical changes to include use taxes in the same tiered rate to comply with the U.S. Constitution Commerce Clause on interstate trade.

After discussion and review of language by two (2) tax experts, those changes were attempted in Ordinance No. 354.  After the  passage of Ordinance No. 354 at the May 25th Council Meeting, the Department of Revenue found another flaw in Ordinance No. 354.  The effective date of August 1 is referring to the sales tax rather than the use tax.

In order to preserve the June 1st effective date of the tiered sales tax, staff is recommending that City Council deny passage of Ordinance No. 354.

In order to preserve the June 1st effective date of the Tiered Sales Tax, staff recommends denial of passage of Ordinance No. 354.

RECOMMENDATION / SUGGESTED MOTION:


I MOVE TO DENY ADOPTION OF ORDINANCE NO. 354.

Fiscal Impact

IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
N/A
CITY/STATE/FEDERAL FUNDS:
N/A
TOTAL:
N/A
BUDGETED:
N/A
AVAILABLE TO TRANSFER:
N/A
GL ACCT # & NAME/REMAINING BALANCE BEFORE PURCHASE:
N/A

FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):

Preserving the effective date of June 1, 2016 will create a reduction in tax for higher-priced items this month. This may attract businesses with higher-priced items to sell to locate in San Luis and so generate more sales tax revenue.

Attachments