October 29, 2012
On the local November 6th ballot there are two proposals for raising taxes.
The City is asking voters to approve a one cent tax hike on every gallon of gas for MATA funding.
Instead of paying $3.46 a gallon you would pay $3.47.
What is the financial situation of MATA? Yes MATA is subsidized by user fees, federal and state grants and the City of Memphis. MATA has the authority to supervise the operations of the City’s transit system. This system is managed by a private firm hired by MATA. The City kicked in $17.9 million last year. The operating revenue was $35.5 million and the operating expense was $58 million for a loss of $22 million. However when you go back to 2005 you will see a loss of $35 million dollars. Therefore they are better off today than they were 7 years ago. I would not recommend this gas tax increase. Nationally gasline is up 100% from 4 year ago.
Then there is the ½ cent sales tax increase on the ballot. For visitors and newcomers to Memphis, sales tax can be a bit tricky. Total sales tax is comprised of both a state tax and a county tax. Then, it can differ from one item to another. Here is how it is broken down:
- Tennessee sales tax on merchandise: 7.0%
- Tennessee sales tax on food (non-restaurant): 5.5%
- Shelby County sales tax (items up to $1,600): 2.25%
- Shelby County sales tax (items from $1,601 to $3,200): 2.75%
So let’s look at some examples:
- If you go to Walmart and purchase a t.v. that costs $500, you’ll pay 7% in state taxes and 2.25% in county taxes for a total of 9.25% or $46.25.
- If you go to Kroger and purchase eggs, milk, produce, meat, and other foot items totaling $50, you’ll pay 5.5% in state taxes and 2.25% in county taxes for a total of 7.75% or $3.88.
- Now let’s say you go to Target and buy $50 in food items and $10 in non-food items. You will pay a total of 7.75% in taxes for the food and a total of 9.25% in taxes for the non-food items for a grand total of $4.80.
- Finally, let’s say you go to Best Buy and buy a computer for $2,000. You will pay 7% in state taxes and another 2.75% in county taxes for a total of 9.75% or $195. NOTE: Here you paid 9.75% on the whole purchase amount. Will the extra .5% be on this whole amount?
Tax increases, once passed, almost never go away. Look at the infamous wheel tax of 1987. It was billed as a one time only tax but it still lives.
My recommendation is to vote it down until the City of Memphis and the MLGW truly reform their pension, health care, line of duty disability systems and cut other expenses. Then and only then can we consider tax increases.