Every municipality collects taxes, but at least one Star Valley councilor believes the town should do away with a $50 “extortion” levy.
Councilor George Binney proposed eliminating the cost to obtain a business license at a recent council meeting.
This he said would send the message that Star Valley is a business-friendly town and may in turn attract a few more businesses in what is now a stale economy. But not every councilor was on board for the change. Some felt eliminating the fee may encourage businesses not to register their business with the town and may even attract unwanted enterprises.
Every year, business owners are required to renew their license for the fee of $50, with the money covering the cost of staff time and paperwork, said Tim Grier, town manager and attorney. The town collects roughly $5,400 a year from the fee.
But Binney questioned if the town really needs the money from the license, especially when businesses are the ones collecting sales tax, which is put back into the town.
“I can’t think of one thing this city does to earn the $50,” he said. “The businesses do us a favor by being in
business in our town.”
While eliminating the tax may make the town more appealing to new businesses, Binney criticized the town for a lack of services offered along the 260 corridor.
“The town of Star Valley has nothing to offer a business, we don’t have sewer on our main structure, we don’t have water on a main structure and we can’t provide fire hydrants on our streets, at least at this time,” he said. “I asked a few business owners in town, “What does the town of Star Valley do for you? And you know what the answer was? Some of the answers were “Nothing.””
With the town offering little incentive to new business owners, some questioned if eliminating a $50 fee would have much impact.
Some councilors wondered if they would want a business if it could not afford $50 a year.
Resident Gary Rolf agreed that $50 should not put a strain on a business.
“If I am going to start a business I better not be hurting for $50, so the dollar amount is not to me the point, the point is the attitude of the town of Star Valley,” he said.
“An investment of $50 to get another business in here would be a heck of a good investment ... And as a gesture of good will, a sales effort to say Star Valley is business-friendly, I think is a good thing.”
Binney echoed Rolf’s sentiment, saying although the license amount is minimal, it still puts a strain on businesses, especially the small ones that don’t make more than $100,000 a year. “The common response has been, well they can afford it, but that doesn’t make it right, there is a right and wrong and they are doing us a favor by being in business in our town, by collecting sales tax for us, so why do we think we have to gouge them for $50?” he said.
Currently, a business that does $100,000 in sales, gives Star Valley $2,000 a year based on the town’s 2 percent sales tax. The business also collects a 6.7 percent tax for the state and county.
Grier said he doesn’t know of a town in Arizona that doesn’t collect a fee for a business license.
In Payson, a commercial business pays $70 for a new license and $50 for a renewal. An at-home business is required to pay $40 a year for a license.
In Camp Verde, a new business license is $50 with annual renewal $15 thereafter.
“The purpose of the Camp Verde business license and business license fee is to regulate the quality of business activity that occurs or is transacted within the town limits. The fee is imposed on the privilege of doing business within the town,” according to the town Web site.
Binney said he is not proposing the town do away with the business license, since it is required to maintain what businesses are operating in town. He only wants to see the $50 fee suspended.
Just because other towns collect a fee for the license, Star Valley could set a new precedent, he said.
“At least one town out of all the other towns across this corrupt state stands up and say we are not going to charge a $50 extortion fee, if that is not extortion, I don’t know what it is.”
Councilor Gary Coon suggested town hall figure out exactly how much it costs to process a business license and maybe the town can lower the fee.
Grier said it is tough to calculate the exact cost when you consider town staff wages, benefits, mailing costs, paper, copying and tracking fees.
“I don’t think we have ever broken it out and it may be difficult to do so,” he said.
Councilor Vern Leis said he was against removing the fee because it may open the floodgates for unwanted businesses moving into town.
“I do not want to see someone with a grenade shop putting it in next to my house,” he said.
Binney said this would not happen because zoning would not change.
Leis also disputed that the town does not need the $50.
“It may be nebulous in some minds,” but everything is down in this economy, he said. The town gets far less from state-shared and sales tax revenue than it did several years ago, so every dollar counts.
Rolf said it is unlikely eliminating the fee would hurt the town, which has a multi-million dollar reserve fund.
Rolf suggested the town eliminate the fee for a few years and see what happens.
Resident Ray Lyons agreed.
“The town needs to get the word out that they are not against business,” he said. “This town needs to get a positive image, better than it has so far.”
If the town does away with the tax, Coon suggested a penalty if people fail to register their business.
The council agreed and was ready to vote on the motion when the question of the town’s ordinance was brought up.
Grier said he did not know if the town would need to change the business permit ordinance. If it does, it would need to notify the public in the paper and hold several public hearings, he said.
With those questions unanswered, the council voted to table the issue until the Jan. 17 council meeting.