From the January 2001 Idaho Observer:

K-County tax revolt imminent

Treasurer opens file on sales tax protestors

COEUR D'ALENE -- Kootenai county treasurer Tom Malzahn's office has received over 400 calls in recent weeks over the county's plans to collect a .5 percent sales tax from county businesses to fund a $12 million expansion of the county jail.

A large percentage of those calling are unhappy about complying with the controversial law which forces them to be tax collectors for the county. Malzahn has reportedly opened a file on tax protestors and has ordered that such calls be forwarded to the county's legal services.

The county modeled the collection of the Resort County Local option Sales Tax after the state's collection of sales tax. The law, which was allegedly approved by voters by a one percent margin last May, was to go into effect January 1, 2001.

However, of the 4,100 businesses in K-county, approximately 2,700 have returned the forms that would start their careers as tax collectors for the county.

The treasurer's office is apparently in a panic as the law has forced it to administer an extremely unpopular can of worms it has no experience adminstrating. It also has no ability to enforce what could prove to be widespread non-compliance. “I think they thought that all they had to do was pass a law and business owners would just hand over the money,” commented Tom Macy of Concerned Taxpayers of Kootenai County (CTKC), the group that has been challenging the tax since it became law under suspect circumstances (The Idaho Observer, May, 2000 and August, 2000).

The office is also concerned that constitutional challenges to the tax will ultimately prevail in state Supreme Court.

County commissioners, who have also been inundated with callers who are opposed to the tax, are also acknowledging the possibility that the law will be overturned in the state's high court. According to the Coeur d'Alene Press, lame duck K-County Commissioner Dick Compton said that the county will keep the money collected from the tax even if the Idaho State Supreme Court declares it invalid.

CTKC attorney Scott Reed believes that state law will see to it that monies collected wrongfully will be returned to those who are on record as complying with the law under protest.

It is that consideration which is fueling the flames of tax revolt in K-county. CTKC is circulating protest petitions that serve two functions: 1. It notices the county that a business is compling under protest. Therefore, if the tax is declared illegal they will demand a return of all taxes collected and; 2. It sends a message to the county that an organized effort is afoot to kill the tax.

“Sales taxes are inherently taxes levied upon the poor. The reason for this is that all or nearly all of the income of economically disadvantaged persons must be spent on the necessities of life. Since these necessities are subject to sales taxes, it can be rightly stated that 100 percent of a poor person's income is being taxed. An affluent person, on the other hand, is able to shield a portion of his income by not spending it,” Macy explained.

Macy said the tax is doubly cruel because part of the tax's sales pitch was that $12 million would be applied to property tax relief which would disproportionately benefit those such as tax's most ardent supporter Duane Hagadone who own the largest and most expensive properties.

Macy is encouraging K-county business owners to contact the county clerk and obtain a copy of County Ordinance #283 which describes the tax. He is also encouraging business owners to file a written tax protest with the county.

For more information, Macy can be contacted at: (208) 777-7423

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