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Plotner prepared a document detailing a
manner in which the city could raise revenue. A couple of years ago
the city passed on an opportunity offered through the Illinois
Department of Revenue because it looked too complicated to partake
in. Now the IDR has re-presented the "simplified telecommunications
municipal tax."
As of Jan 1, 2003, municipalities can
more easily regulate the taxes our telecommunications providers
collect for our communities. All it takes to change the tax rate is
a verified, approved ordinance submitted to the Illinois Department
of Revenue. Twice a year cities have opportunity to submit their
ordinance. Those that submit in September will begin receiving money
in January. Those that submit in April will begin receiving money in
October
Plotner says that he isn't necessarily
recommending to do this, but in lean times it could be helpful.
Discussion to change our rate and establish a new ordinance would
not need to be started until February. The next opportunity to submit an
ordinance, in April, would see revenue in October 2004.
The manner in which the tax is
collected and then sent to a municipality takes four months. The
telecommunicators charge the customers the sales tax. The
telecommunicator sends it to the Illinois Department of Revenue. The
time frame works as such: June charges go to liability month in
July, collection month in August, messaging month in September and
distribution month in October. So, June sales tax is received by the
municipality in October.
The municipality sets its own sales tax
rate. Currently the average community has a 6 percent sales tax
rate. Chicago is at 7 percent sales tax rate. Lincoln is currently
receiving only 1 percent.
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In the first five months of fiscal
2003-2004 Lincoln has received an average of $6,777 per month. While
the monthly amount has varied, Plotner estimates that it will
produce $60,000-$80,000 in sales tax revenue this fiscal year. If
Lincoln were to raise the percent, the revenue would be a multiple
of those figures, such as at 2 percent the estimate is
$120,000-$160,000. A 3 percent rate would yield $180,000-$240,000
and so on.
A major benefit is that there are no
restrictions on the use of this revenue.
On the
downside, Plotner cautioned, "If you tax the telecommunicator, they
will pass it on to the customers."
[Jan
Youngquist]
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