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PELHAM, Ala. (WIAT) — On Monday evening, Pelham City Councilors started a process to implement a one cent sales tax increase on all city sales.
One of the lingering questions, though, is how the tax will affect the business owners who collect it.
The businesses in Pelham seem to have a distinct advantage over nearby cities because of their sales tax.
The tax, currently at eight percent, is one cent lower than anyone else’s.
So, then, the questions remains: why change it?
City Council President Rick Hayes says the funds will be used to help the city’s schools if the tax increase is passed. In fact, it will be used to help the schools even if Pelham doesn’t go to a city system in the near future.
“It will be close to $5 million. Right now, our current estimates are based on this year’s numbers, [which] are north of $4.8 million and getting close to $4.9 million,” Hayes said. “It will be somewhere in that range.”
However, business owners like Ken Finch, who owns Party Express, will do all the collecting of the taxes.
He says he doesn’t really think most Pelham customers will notice a major difference.
“I think if they’re buying something in my store, and they’re paying a dollar for it, and they know it will be $1.08, that kind of catches their attention,” Finch said. “It’s so obvious. But I’m not sure, other than that, that they really know.”
Not all business owners in the city are seeing the increase the same way, though.
“I feel it will have some negative impact in the store,” Dave Szatmary said.
Szatmary owns Oak Mountain Hobbies and Toys. He believes he will lose customers due to the fact that customers won’t drive to his store just to save an extra one percent.
“People are trying to save every dime they can save because the economy is in really bad shape, regardless of what you hear,” Szatmary continued. “I think if they can save a couple of bucks they’re going to save it.”
In the end, though, it’s a loss he doesn’t think he will see immediately. He says it will come during the Christmas Holiday.
Copyright 2013 WIAT-TV CBS 42