Business Owners Out To Stop Tax Levy


Some 40 local restaurant owners and managers gathered at The Small Cafednesday afternoon to map out a protest strategy to a proposed 2-percent increase in the local sales tax on food and alcohol.

The restaurateurs, who were joined by Payson Town councilmembers Hoby Herron and Ken Murphy, who both oppose the council initiative, complained that the proposed tax would burden local residents. Locals, the restaurant owners said, make up most of their customer base.

The tax measure, commonly referred to as a bed, board and booze tax, would decrease Payson's hotel bed tax from 3 percent to 2 percent, while imposing a new 2-percent tax on restaurants and bars. Coupled with the 2-percent local option sales tax that all local businesses already pay, the bed, board and booze measure would establish a uniform 4-percent local tax on the gross sales of hotels, restaurants and bars.

Combined with Arizona's 6-percent sales tax, the local sales tax measure would bring the total tax on restaurant, bar and hotel services to 10 percent, Todd Zelinski, owner of The Small Cafsaid. That, he said, is unacceptable.

"I've been in business at this location for 10 years," he said, "and it's going to be hard for me to hand that 10 percent ticket to the people who have supported us for all that time."

The extra 2-percent levy would increase the tax on a $25 restaurant tab from $2 to $2.50.

Zelinski, who along with several others in the audience, said he was not aware the item was going before the council, called Councilmember Bryan Siverson when he heard about it.

"Siverson told me, 'You're the largest vessel to be able to go out and collect this tax for us.'

"I said, 'You're right, but you don't realize one thing we are the largest vessel in this town, we collect the most tax money in this town, we employ the most people in this town. That gives us the most power if we're all together as one and speaking together as one.'"

Zelinski also told the audience that he had talked to Mayor Ray Schum, and that Schum was under the misconception that local restaurants are "basically supported by out-of-town visitors. He asked me, 'What's the percentage or base of local people who come to your restaurant?' I said, 'Mr. Mayor, look around. It's 100 percent today, and usually it's 90 percent.'"

Those in attendance also were upset that the Rim Country Regional Chamber of Commerce to which they all belong endorsed the tax.

Mike Harper, chairman of the chamber board, told the assemblage that the chamber's official position is undecided.

"Taxes like this have worked well in other communities when they're done right, particularly in Flagstaff, as a way to increase tourism and promote the economy," Harper said. "But, he added, "the way the money is spent is critical."

The extra annual revenue that would be generated estimated by the town to be about $450,000 a year would be used to help fund a number of "projects that will improve the quality of life in Payson."

Those projects include enclosing the public swimming pool for year-round use, helping to fund a new community recreation center, covering the Payson Event Center, beautifying the entrance to Payson and providing the Rim Country Regional Chamber of Commerce with funds to improve business retention and promote Payson as a tourist destination.

"The chamber has a vested interest in the tax," Murphy said, "because that helps fund the executive director's salary."

Councilmember Jim Spencer, who sponsored the initiative, said the tax is a way to level the playing field, and is in line with what other progressive cities like Flagstaff have done.

"Right now, we're just collecting 3 percent from the hotels, and that's it," Spencer said.

While the amount added to a restaurant or bar bill would be minimal, he said it offers the town a way to have tourists who don't stay in hotels help pay for the services they use.

In the end, the group decided to practice a little participatory democracy by writing letters to the editor, calling in to KMOG talk shows, purchasing a full page newspaper ad to explain their position, placing tent cards around their establishments naming councilmembers who voted for the tax, and attending the next council meeting on Thursday, March 8 to address the issue during the open forum.

When one attendee asked who would speak for the group, Zelinski said, "Every one of us."

The restaurant owners and managers have scheduled another meeting for 4 p.m. Monday, March 5, at the Manzanita Apartments Community Room.

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