Back on October 9th I received an email from a colleague that the Department of Revenue was proposing a change to one of the rules regarding the application of sales tax in Iowa. After sorting through some of the misinformation that we had received, it was discovered that some items that had previously been subject to sales tax would become exempt under this rule change. As consumers, we all know that some of the goods that we purchase are sales tax exempt. For example, most items that we buy at the grocery store are not taxed. What this rule would do is expand the number of items that are sales tax exempt. Hold on though--the rule is not intended to grow the list of items for the consumer, it is designed to broaden the list for manufacturers. In practice, it will increase the list to include items used in the manufacture of goods. I would give you an example, but I am not exactly sure what those might be.
|Stadium lighting funded through|
Capital Project fund.
The current school sales tax is scheduled to sunset in 2029, and economists estimate a loss of $98 Million to $196 Million over the life of the sales tax statewide if this rule change goes into effect. If we put that in our local perspective, that suggests a loss in revenue for Hudson schools somewhere between $135,957 and $256,065. This means that some future project probably won't get done.
This change comes about in response to a petition from the Iowa Taxpayers Association. In that petition, they ask for this rule change. Many people believe that issues of taxation and this type of policy making is reserved for the legislature and that this rule making shifts the balance of power. The fact is, this bill has been proposed several times and has not garnered the support necessary for legislative approval. The balance of power issue is raised because the Department of Revenue is under the authority of the executive branch.
|Elementary restroom renovation funded through Capital|
Project fund. Summer, 2015.
The Administrative Rules Committee, which is made up of 10 legislators (five from each chamber and five from each party) met to consider the rule change last week. The committee voted to reject the rule change, but the motion failed on a 5:5 vote. This means the rule will go into effect on July 1, 2016 unless the legislature and governor change it with legislation. The chances of this happening are slim.
|Real estate acquisition (hotel property) funded through|
Capital Project fund. Summer, 2015.
Are schools and education in Iowa considered an investment in our future or a burden on society?