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Local Option Sales and Service Tax FAQ

By: City of Bondurant
Date Published: Wednesday, February 28, 2018
 

Upcoming Vote 

On March 6, 2018, the voters of Bondurant will be asked to vote in a special election on a measure that would impose a local sales and services tax at the rate of one (1) percent in the incorporated area of Bondurant.

Voting Info

What is LOSST?  Local Option Sales and Service Tax

Local Option Sales and Services Tax (LOSST) is a one percent (1%) tax that applies to transactions on certain goods and services within certain geographical areas within the State of Iowa. The tax is imposed on the same basis as the State sales and services tax and may not be imposed on the sale of any property or any service not taxed by the State. The tax is also NOT imposed on the gross receipts from the sale of motor fuel or special fuel as defined in Chapter 324, on the gross receipts from the rental of rooms, apartments, or sleeping quarters which are taxed under Chapter 422A during the period the hotel and motel tax is imposed, on the gross receipts from the sale of natural gas or electric energy in a city or county where the gross receipts are subject to a franchise fee or user fee during the period the franchise or user fee is imposed, and on the gross receipts from the sale of a lottery ticket or share in a lottery game conducted pursuant to Chapter 99 E. Other exemptions/restrictions apply and additional information can be found through the Iowa Department of Revenue.

The LOSST rate cannot exceed 1%, however qualified voters of the area where the tax has been imposed can vote to change the rate to any amount that does not exceed one percent. The rate proposed for the March 1 ballot is 1%.

How does this tax work?  Will everything we buy be subject to this tax?
The short answer is No.  As mentioned above, exemptions from LOSST are the same as those items excluded from state sales tax, i.e. most grocery food items, vehicles (are charged a one-time registration fee rather than a state sales tax), farm equipment, etc.

Who has LOSST?  
In Iowa, 97 out of 99 counties (over 1,300 cities and unincorporated areas) already have a local option sales tax, which allows them to collect an extra penny in sales tax for every dollar spent in their communities.

Where does the money come from and how much money will be collected from this tax?  
Estimated revenue total for Polk County is $80,735,287 of which Bondurant’s distribution is estimated to be $781,710.  It is also estimated that a significant percent of the revenue this sales tax would generate for the City of Bondurant would come from people who do not live in Bondurant.

How would the money be used?  
The City Council of Bondurant voted on December 4, 2017 to dedicate 60% of any local option sales and service tax collected for property tax relief for its residents and 40% for street improvements, other public infrastructure, and capital needs. While most cities have indicated they would dedicate 50% to property tax relief, the Bondurant City Council chose to dedicate a higher amount to property tax relief, as lowering the City’s property tax levy rate has been something they have been dedicated to doing for the past eleven years. (Each year, for the past twelve years, the Council has lowered the levy rate by $0.05.) If the Local Option Sales and Service Tax passes, it is estimated that the City of Bondurant property tax rate, which is proposed to be $13.78948 per thousand dollars of taxable valuation for FY19, would be lowered by $1.94509. Additionally, the funds dedicated to street improvements, other public infrastructure, and capital needs would mean that more money would be available for these projects/needs without needing to increase the debt service levy. For information about the City’s capital plan, please visit: http://www.cityofbondurant.com/webres/File/Budget%20Info/Capital%20Improvements%20Plan.pdf.

Can you discontinue LOSST should citizens no longer want it?
The tax can be repealed in the same method in which it is added to the ballot. Current language indicates no sunset clause (no expiration date) but can be changed by a vote as well.

Every community within Polk County will vote on accepting/declining LOSST on March 6, 2018.  If a majority of the county approves LOSST, will each community be required to implement this tax?  
While the election is countywide, the tax would only apply to the area or city where a majority (50% plus one – a simple majority) of voters favors this tax. However, please note that cities that share borders are required to vote on the issue as one jurisdiction, meaning, Altoona, Pleasant Hill, and Bondurant will be grouped in with Des Moines, West Des Moines, Urbandale, Clive, Johnston, etc. This vote could technically fail in one city, but if the contiguous cities pass the tax, and it adds up to a majority of the people residing in said contiguous cities, it will pass. It was because of the “contiguity” provision that the Bondurant City Council decided to pass the language to dedicate the funding for property tax relief/capital needs in the event LOSST passes.

Is LOSST a continuation of the 1% sales tax that is already in place for schools?
The schools 1% sales tax is called “SAVE” or Secure an Advanced Vision for Education. LOSST does not affect this tax that is already in place for schools.

**For more information, access the Department of Revenue’s website at: https://tax.iowa.gov/iowa-local-option-sales-tax-lost-questions-and-answers.