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HomeMy WebLinkAbout21838. ORDINANCE NO. (4/03 AN ORDINANCE of the City of Port Angeles imposing a business and occupation tax upon certain businesses, occupations and privileges, requiring a business license for the same, providing for the collection thereof, defining offenses, prescribing penalties, and repealing Ordinances 1148 and 2150 and Chapter 5.80 of the Port Angeles Municipal Code. (a.1.8! BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF PORT ANGELES, WASHINGTON, as follows: Section 1. The provisions of this Ordinance shall be deemed to be an exercise of the power of the City of Port Angeles to license for revenue. Section 2. (A). After January 1, 1982, no person, firm or cor- poration shall engage in or carry on any business, occupation, act or privilege for which a tax is imposed by this Ordinance, without first having obtained, and being made the holder of, a license so to do, to be known as an occupation license. (B). Each person, firm or corporation required to have a license shall promptly apply to the City Clerk for such license, upon such forms as the Clerk shall prescribe, giving such information as the Clerk shall deem reasonably necessary for the administration and enforcement of this Ordinance. (C). Upon his acceptance of such application the Clerk shall thereupon issue such license to the applicant. Such occupation license shall be personal and non - transferable, and shall be valid as long as the licensee shall continue in said business, and shall continue to comply with the provisions of this Ordinance. Section 3. (A). From and after January 1, 1982, there is hereby levied upon, and there shall be collected from, every person, firm or corporation engaged in carrying on telephone business for hire or for sale or as a service within or partly within the corporate limits of the City of Port Angeles a tax for the privi- lege of so doing business. Such tax shall be levied at a rate equal to 5.5% of the total gross operating revenues, as defined in this section, which are derived within the City of Port Angeles. (B). For the purposes of this section, "gross operating revenues" shall not include charges passed on to its subscribers by a telephone company pursuant to tariffs required by regulatory order, to compensate for the cost to the company for the tax imposed by this Ordinance. "Gross operating revenue" shall also not include any revenues received from intrastate tolls derived for the operations of such business within the City of Port Angeles. (C). For the purposes of this section, "telephone business" means the business of providing access to a local telephone network, local telephone network switching service, toll service, or coin telephone services, or providing telephonic, video, data, or similar communication or transmission for hire, by a local telephone network, toll line or channel, or similar communication or transmission system. Telephone business includes cooperative or farmer line telephone companies or associations operating an exchange. Telephone business does notinclude the providing of competitive telephone service, nor the providing of cable television service. (D). For the purposes of this section "competitive telephone service" means the providing by any person of telephone equipment, apparatus, or service, other than toll service, which is of a type which can be provided by persons that are not subject to regulation as telephone companies under Title 80 RCW, and for which a separate charge is made. Section 4. From and after January 1, 1982, there is hereby levied upon, and there shall be collected from, every person, firm or corporation engaged in carrying on telegraph business for hire or sale within or partly within the corporate limits of the City of Port Angeles a tax for the privilege of so doing business. Such tax shall be levied at the rate of 3% of the total gross operating revenues of such business derived within the City of Port Angeles. Section 5. In computing said tax there shall be deduct- ed from said gross operating revenues the following items: (a) The amount of credit losses and uncollectibles actually sustained by the taxpayer; (b) Amounts derived from transactions in intrastate or foreign commerce or from any business which the City is prohibited from taxing under the Constitutions of the United States or the State of Washington; (c) Amounts derived by the taxpayer from the City of Port Angeles Section 6. Each taxpayer shall keep records reflecting the amount of his said gross operating revenues, and such records shall be open at all reasonable times to the inspection of the City Clerk, or his duly authorized subordinates, for verification of said tax returns or for the fixing of the tax of a taxpayer who shall fail to make such returns. Section 7. If any person, firm or corporation subject to this Ordinance shall fail to pay any tax required by this Ordinance within thirty (30) days after the due date thereof, there shall be added to such tax a penalty of percent (18 %) of the amount of such tax, and any tax due under this Ordinance and unpaid, and all penalties thereon, shall constitute a debt to the City and may be collected by court proceedings, which remedy shall be in addition to all other remedies. -3- Section 8. Any money paid to the City through error or otherwise not in payment of the tax imposed hereby or in excess of such tax shall, upon request of the taxpayer, be credited against any tax due or to become due from such taxpayer hereunder or, upon the taxpayer's ceasing to do business in the City be refunded to the taxpayer. No taxpayer may demand a refund of tax collected more than three years from the date of the demand. The City may not demand a tax more than three years after the tax is accrued. Section 9. Any said person, firm or corporation subject to this Ordinance who shall fail or refuse to apply for an Occupational License or to make said tax return or to pay said tax when due, or who shall make any false statement or represen- tation in or in connection with any application for an Occupation- al License or such tax return, or shall otherwise violate or refuse or fail to comply with this Ordinance, shall be guilty of a misdemeanor, and, upon conviction thereof, shall be punished by a fine of not to exceed $500.00. Each day's offense shall be deemed a separate violation. Section 10. The invalidity or unconstitutionality of any provision or seciton of this Ordinance shall not render any other provision or section of this Ordinance invalid or unconstitutional. Section 11. The City Clerk is hereby authorized to adopt, publish and enforce, from time to time, such rules and regulations for the proper administration of this Ordinance as shall be necessary, and it shall be a violation of this Ordinance to violate or to fail to comply with any such rule or regulation lawfully promulgated hereunder. Section 12. This Ordinance shall be in full force and effect on and after January 1, 1982. -4- • Section 13. Ordinance No. 1148 and 2150 and Chapter 5.80 of the Port Angeles Municipal Code are hereby repealed. Section 14. Sections 1 through 11 of this Ordinance shall constitute a new chapter in Title 5 of the Port Angeles Municipal Code. PASSED by the City Council of the City of Port Angeles at a regular meeting of the Council held on the % day bf /6 4,ya4e, 1981. ATTEST: Marian C. Parrish, City Clerk APPROVED AS TO FORM: Craig L. ,iller, City Attorney PUS SHED: 9' / ?S)1 -5 -. MAYO ‘4g--"Di • Z1�1 pa . /o. ao . $/ AAPQovEP /I. IT. 8/ 1/1-4_ MEMO: October 15, 1981 TO: Dave Flodstrom, May Haguewood and Councilmembers FROM: Rob Orton, Director inance and Administrative Services RE: Revision to Telephone Utility Tax As you know recent state legislation deregulating certain aspects of the telecommunications industry,, wil'l,.have a profound 'impact on City tax revenues derived from-the -business taxation of "the Pacific . Northwest Bell Telephone Company, The new legislation takes effect January 1, 1982, and unless the City reacts to amend its current taxing authority, the General Fund could stand to loose as much as $40,000 in 1982 and beyond as a result of this measure. Briefly, the telecommunications industry has won certain taxing relief in view of the fact that they have effective competition, particularly from equipment sales, from a number of nonutility,nonregulated businesses. The City presently levies a 3% tax on the gross receipts of the telephone company and certain of the corporation's revenues would be exempt from taxation under this new legislation. At the present time, revenues derived from basic services as well as 20% of all toll calls originating in Port Angeles are subject to the City's 3% tax. We essentially have three options available to us. The first two options are at the suggestion'of the telephone company while the third option is my own suggestion. All three alternatives have in mind the one goal of achieving the same proportional revenue which we presently obtain through our tax rate. This is about $65,000 in 1981 and of course this is subject to grow with increased utilization in the service area, as well as rate increases approved for the telephone industry by the Washington Utilities and Transportation Commission. Part of the legislation imposes sales tax on certain equipment sales which the company makes in this area. As indicated in the first two options, the telephone company has indicated that the City could realize revenue of approximately $2,800 in sales tax receipts as a result of this action. The three options are as follows: Option #1: Levy the City tax on basic monthly services and 100% of the intrastate on long distance toll calls. Adjust the utility tax rate to take into account $2,800 a year received from sales tax receipts on equipment sales. 0 Discussion: This option would increase taxable revenues on toll calls from 20% to 100% of such events. The action would enable ir October 15, 1981 Revision to Telephone Utility Tax 2 Option #2: Discussion: Option #3: Discussion: the City to reduce its utility tax from 3% to approx- imately 2.8 %. However, this action would mean that almost 50% of our revenue base would be attributed to a highly fluctuating and sporadic trend in long distance utlization in this area. From a community perspective, the tax even though lowered, would increase • the tax cost to people .who *relied heavily on long distance calls. Impose the City tax on basic services only and adjust the tax rate to take into consideration the $3,000 received from sales tax on equipment. This option eliminates the tax on intrastate toll calls completely and would result in the City having to increase its tax rate from 3% to 5.2 %. Save for the $3,000 attributed to equipment sales, this measure assures a better opportunity for the City to maintain its same proportionate share of tax revenue from this utility as it has in the past. From a community perspective, users of telephone services who had very little or no long distance charges would pay approximately 2.2% more in taxes on their regular monthly phone bill. Impose a City tax on basic services only at a rate equal to 5.5 %. This method is by far the most effective means of assuring that the City will continue to receive ongoing revenue equivalent to years past, without the worry of loosing funds due to sporadic fluctuations in the local economy. I do not favor the options which include sales tax receipts for two reasons. First, because equipment sales at any particular level are never guaranteed in a market economy and the City could never be assured that that same level of income is available to it each year even in spite of inflation and price increases. Secondly, the money estimated to accrue to the City from this resource is completely indistinguishable from any other sales tax receipt which the City presently enjoys. It would therefore be impossible to monitor whether or not this revenue is actually being earned. In order to eliminate reliance on estimated sales tax receipts and still maintain the equivalent revenue of years past, it would be necessary under this option to increase the City's utility tax to 5.5% or .03 of 1% above that proposed in option #2. The third option also eliminates any reliance on the highly volatile level:of long distance is calls. Telephone company analysts tell me that the Port Angeles area has a history of significant fluctuations in long distance usage. On November 3, I will be submitting to the Council an ordinance which implements an option of the Council's choosing. The City Manager thought it best to include this on the information agenda in order to allow October 15, 1981 Revision to Telephone Utility Tax 3 Council members time to digest and weigh the effects of the various options. 1 should add the telephone company has been recommending option #2 as the desirable alternative for most cities affected by this 0 legislation. We have consulted with several other cities that have already taken action to remedy the impacts of the legislation, and - find that most are favoring the second option-as well.= 1 suggest the third alternative only as a means of insuring that this important revenue source is stabilized in the years ahead. Owing to the fact that the City is extremely limited in how it may influence what taxes it currently has the authority to levy, 1 would hope that the City Council would favorably consider the third option and: approve a raise in the utility tax to the telephone company of 2.5 %. • Thank you. ml • @gcp Affi t.0�� Og W al get °) 0)(1(t c)g 4719 BROOKLYN AVE. N.E. • Caller No. C -5373 • SEATTLE, WASH1NGTQN'9B 105 • TEtEPHONE 206 - 543 -9050 ry 1v 1\c)(' ,it TO: 'City Officials v A o FROM: (J Stan Finkelstein, Assistant Director SUBJECT: Implementation of SHB 61 - Relating to Telephone Taxation During the 1981 legislative session, the legislature approved Substitute House/Bill 61 (SHB 61), Chapter 144 Laws of 1981, which substantially modifies the applicability' of state and local utility taxes to certain types of telephone services. The measure, which takes effect on January 1, 1982, is consistent with the recent Federal/Communications Commission (FCC) order deregulating "competitive telephone services'` SHB. 61 will have an adverse impact on most cities and towns imposing telephone utility taxes unless local ordinances are amended to avoid reduced revenues (a copy of one section of such a model ordinance is attached). The measure exempts competitive telephone services from both the state and local utility taxes,,and subjects those services to state and Iocal sales taxes and to generally applicable business and occupation (B &O) taxes. The legislation defines "competitive telephone services" as: "...the providing by any person of telephone equipment, apparatus, or service, other than toll service, which is of a type which can be /provided by persons that are not subject to regulation as telephone companies under Title 80 RCN and for which a separate charge is made." Cities can avoid reduced revenues by either an increase in the city's telephone utility tax rate or by extension of the utility tax to 100% of intrastate toll revenues. Most cities currently tax only 20% of such interstate toll charges and extension of the local utility to the resnaining_8o% will in large part mitigate the fiscal impact. Representatives of Pacific Northwest Bell and other companies are willing to help Iocal officials deal with the impact of the new law and discuss the model ordinance. If you have questions or would simply like more information on SHB 61, contact Stan Finkelstein, Assistant Director, in the ANC Olympia office at toll -free 1- 800 -562 -8982 or (206) 753 -4137.