Calling it unfair and unreasonable, the Utah Taxpayers Association has become the latest organization to oppose the proposed lifting of West Valley City's franchise tax.
"This shift in tax policy would send a signal to those looking to expand or locate in West Valley in the years ahead that the city has a hostile attitude toward business," said the association in a "tax alert" letter to its members.City officials originally indicated they wanted to remove the cap on all utility taxes but have since limited their proposal to the $19,000 electric utility tax cap.
If approved by the City Council, the action will generate in excess of $200,000 from major electricity users, mostly Hercules. City Manager John D. Newman has indicated that the money is needed to preserve the integrity of bonds that were issued to finance the 600-acre West Ridge safety buffer zone around Hercules.
"The Utah Taxpayers Association feels the city is being unfair to expect one taxpayer to guarantee the success of the (West Ridge) golf course and commercial park, yet this is what is being attempted with Hercules."
The Utah Manufacturers Association and the Valley West Chamber of Commerce have also expressed opposition to the proposal, and Hercules has been lobbying heavily against it.
West Valley officials argue that taxpayers were told that they wouldn't be asked to bear the tax burden for the Hercules buffer zone. Also, they say few other cities have tax caps.
The taxpayers association responded in its alert that other cities may not have caps, but Salt Lake City provides a rebates for taxes that exceed .75 percent of gross sales. And other cities have significantly lower franchise taxes than West Valley City, it added.
"A major factor in lifting the cap is a dispute between the city and the county over which entity gets Hercules' property taxes in the year (1988) it was annexed to the city," the association said. "It is unreasonable to expect any taxpayer to be responsible for that dispute or to pay additional taxes because of it."
The association also said it does not make sense to impose a permanent tax increase to solve a one-year revenue problem.
The issue is expected to be debated during the City Council budget hearing, Thursday, May 16, at 6 p.m.