MINOCQUA – After several months of study, a committee of the Minocqua Town Board has proposed enactment of a special sales tax called a premier resort area tax (PRAT) on tourist related purchases to finance road projects.
The tax could produce as much as $600,000 annually for the town, suggested Phil Albert, member of the town’s broadband and business development committee that undertook the study last May. The figure is an estimate from the Wisconsin Department of Revenue.
“I think 600 thousand can go a long ways for street improvements and potholes in the town of Minocqua,” Albert said.
In addition, he said, the town could accelerate its road program using PRAT funds. Albert and committee chair Pete Otis outlined the broad concepts of PRAT to the town board Tuesday. The town board did not vote on the proposal, but directed the committee to further study the matter. Otis wants to hold public meetings to educate the public on the proposal. The proposal wasn’t met with high enthusiasm, but nor did it produce solid opposition.
Supervisor Billy Fried voiced skepticism, saying no one welcomes an additional tax. But he, like the others, was willing to learn more, including how the business community views the proposed tax. “Personally, I’m resistant to it,” Fried commented, “But I’m open to further discussion and finding out questions and concerns and maybe surveying some of our local businesses to see what their feelings are on it. “The money always look good, but sometimes you know you’re going to drive people to do more on-line shopping or go someplace else. Sometimes it’s good to say, hey come here, we don’t have a PRAT tax. I want to make sure we consider both sides and balance it before we move it forward too quickly.”
Supervisor and business owner Bill Stengl said while the impact may not be large on a single purchase (he noted that PRAT on a $1,000 bicycle purchase would be $5), consumers would be reluctant to see another tax. “My initial thought is based on what I’ve heard so far, is that anything that makes our merchants less competitive is not something I’m interested in,” Stengl said. “It’s a mental issue. Amazon is not going to collect PRAT tax.” But Otis said roads have to be paid for, whether with PRAT revenues or with real estate taxes. With 190 miles of town roads, the need is there.
Public works director Mark Pertile said it costs $175,000 to put down a mile of new asphalt. Wisconsin Act 25 allows the PRAT to be as high as 1.5 percent (City of Wisconsin Dells and Village of Lake Delton both charge 1.25 percent), but the Minocqua committee is looking at the lowest 0.5 percent rate. Both tourists and residents would pay the tax. Two Lakeland area cities already have the tax: Rhinelander and Eagle River, both at 0.5 percent. Otis said Rhinelander is expected to generate $400,000 this year from the tax, an amount that was predicted by DOR. The state would collect the PRAT from retailers and remit 97 percent of the funds back to Minocqua. A vote on the PRAT probably won’t be made for months, pending those public meetings. When it does, supervisors will be asked to put the matter before the electorate in a binding referendum. If the voters agree to the PRAT, then it would go to the state Legislature for approval. If approved there, then the town could use PRAT revenue for a number of projects, just as long it was related to infrastructure expenses. In addition to roads, allowable uses are for sewer and water, sidewalks, boat ramps and even fire trucks. But supervisors were of one mind, that if approved, that PRAT funds would go for road repairs and maintenance. N
ot all businesses, nor all products and services would be subject to the PRAT. For instance, food in grocery stores (already exempt from sales tax) would not be taxed; nor big-ticket items such as boats and cars, said Otis. Whether a business is subject to PRAT is determined by what’s called a Standard Industrial Classification (SIC) code that each business uses when filing tax returns to the state. State law says a municipality or other political entity can enact a PRAT ordinance on its own if at least 40 percent of the equalized assessed value of the taxable property within its boundaries is used by tourism-related retailers. Otherwise, they have to petition the Legislature for approval.
Minocqua, like Rhinelander and Eagle River, doesn’t have that 40 percent threshold. But first, two-thirds of the town board would have to approve an ordinance or resolution declaring its intent to declare itself a premiere resort area. Then comes the binding referendum on a majority vote. The referendum would likely take place next November.