theadanews.com - Ada, Oklahoma

July 24, 2013

Shopping locally helps our community

Christine Pappas, Contributing Writer
www.theadanews.com

Ada —

The Oklahoma Tax Commission website has a handy sales tax calculator that informs shoppers how much tax should be collected at every address across the state.  For example, when I entered an Ada street address, the calculator informed me I should pay 9.375 cents in sales tax for every dollar I spend. This is broken down into three categories.  The state collects 4.5 cents of the total, as it does on every purchase throughout the state.  Pontotoc County collects .875 of a cent. Finally, the city of Ada collects 4 cents.  Adans are quick to say that our city has the highest sales tax in the state but it’s not true. That dubious distinction goes to Fort Gibson with an 11 percent sales tax, according to the Oklahoma Policy Institute.

Consumers in Ada probably noticed the sales tax increased in April from 9.18 percent to 9.375 percent. The increase resulted from last November’s vote to add a quarter-cent sales tax for rural fire departments, as well as Call-A-Ride, the county nutrition center, and emergency management.  

Each state works out a different mix of sales, income, and property tax depending on the level of services the state wishes to provide to its people. Oklahoma is considered to be a “low tax and low service” state, meaning taxes and services are minimal compared to other states. Comparatively Oklahoma has a rather high sales tax (the fifth highest in the nation), but low income and property taxes.  For example, Oklahoma’s income tax tops out at 5.25 percent of income earned.  Income tax reform has been in the news because Governor Fallin would like to join other states such as Texas in completely eliminating the income tax. Her rationale is that eliminating the income tax would spur investment in Oklahoma by encouraging new businesses to locate here. However, this claim has been debated and it must be noted that the lost income to the state would have to be replaced through either property or sales tax.

Political scientists would call a high sales tax “regressive” in nature. Every consumer pays the same percentage whether he makes minimum wage or is a millionaire. Oklahoma also enforces the sales tax on groceries, which is particularly difficult for working families. For example, if you only have $10 to buy food for your family but almost a tenth of that is taken by taxes, then your children will be forgoing a can of soup or a loaf of bread.

The sales tax paid in the city of Ada directly improves Adans’ quality of life. The city’s budget for financial year 2012-2013 was $58.8 million, with 70 percent of this figure generated from sales tax. Through a series of ballot measures, the voters of Ada have voluntarily taken on more and more sales tax. For example, voters passed Proposition I to improve roadways and infrastructure and Proposition II to encourage economic development. I contacted Lisa Bratcher, Ada customer service specialist, to clarify how Ada spends its 4-cent share of the sales tax. 

Spending is divided into four major categories. First, 2 cents goes to the general fund. This money funds city operations, such as city employee salaries, regular street maintenance, the police department, and the public library. During this budget year the city additionally prioritized protecting water rights, investing in water infrastructure, as well as improving the intersection of Mississippi Avenue and Arlington Boulevard.  Proposition I money (three-quarter cent) will be invested in additional street, water, and sewer projects.  Proposition II money (one-quarter cent) is reserved for economic development, such as money spent marketing the city. 

Finally, the “Penny for our City” money (1 cent) will be spent on projects such as new police and fire stations, a sports complex, a water line replacement study, and renovations to city hall. 

In short, shopping locally helps our community. The money collected by the city and county can be used to provide the services we all desire. However, when we drive to Texas or even Oklahoma City for cheaper prices and lower taxes we are really robbing ourselves.

Christine Pappas, J.D., Ph. D is professor of Political Science and coordinator of the Department of Political Science at East Central University