L’burg considers gross receipts tax


By Chris Cooper - ccooper@newsdemocratleader.com



Deciding how to generate additional revenue, the City of Lewisburg contemplates changing from net profits to gross receipts.


The City of Lewisburg needs to generate more revenue to be able to continue the necessary upgrades required on services, as well as allowing for capital projects so the city can grow. Where to get the additional funding has been discussed at length by the council and mayor. One of the options is to change from a net profits tax to a gross receipts tax, which is similar to a sales tax, but it is levied on the seller of goods or service consumers.

Currently the City of Lewisburg levies a net profit tax of 1.5 percent that companies or people in business pay on their net receipts. Going to a gross receipts tax- like the City of Auburn has- basically collects tax on gross earnings.

“The city needs more income,” said city clerk Angela Swinney. “We have larger business that pay no net profit tax because they are able to write off more deductions. This is not a fair process and the city’s goal is to make it a little more fair for all, while generating additional funding..”

The main concern being discussed now is how it will affect smaller businesses. By passing a gross receipts tax, the city will be able to set the percentage lower for smaller businesses, but still gain higher revenue from larger ones.

“We are meeting the bills fine,” said Swinney, “but it’s getting harder and harder to do anything else. In a city you need to be able to upgrade and complete new projects to grow. We need to find ways to generate those funds for the betterment of the citizens who live here. Costs keep going up, but revenue does not. We haven’t increased any of our city fees in several years. One of the last I believe was an increase in our business license. It went from $25 to $40 15 years ago.”

The most obvious choice for the mayor and council at this time is to switch to a gross receipts system. Although nothing has been officially decided. The issue has appeared on the monthly meeting agenda, but the council has yet to pull the trigger on changing.

If the city changes how it collects taxes they would also set a cap, which would be a fixed amount not to exceed. According to some numbers thrown around recently, the change would most likely increase what the city gets by $30,000 at a half percent, with a $5,000 cap. Swinney figured on just a few businesses at the current net profits, and the city only generates $9,800 annually. But this doesn’t include all the businesses and is just an estimate.

“They are going to have to make a decision to do it or not soon,” said Swinney. “It’s been on agenda for sometime now, and Lewisburg is going to have to have an option to generate more revenue.”

This is not something the council is taking lightly, and has been discussing for some time. But it is being contemplated because the city has to grow.

Deciding how to generate additional revenue, the City of Lewisburg contemplates changing from net profits to gross receipts.
http://newsdemocratleader.com/wp-content/uploads/2015/11/web1_87778021.jpgDeciding how to generate additional revenue, the City of Lewisburg contemplates changing from net profits to gross receipts.

By Chris Cooper

ccooper@newsdemocratleader.com

To contact Chris Cooper, email ccooper@newsdemocratleader.com or call 270-726-8394.

To contact Chris Cooper, email ccooper@newsdemocratleader.com or call 270-726-8394.

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