NFIB/Kansas Laments Ruling on Driveway Tax

Date: November 12, 2013

Related Content: NFIB in My State State Kansas

Topeka (November 12, 2013) – A judge’s decision today upholding a controversial traffic tax in Mission, Kansas, is a blow to local merchants and has dangerous implications for small businesses statewide, said the National Federation of Independent Business (NFIB) today.

“If this ruling is upheld it’s going to encourage local officials across the state to target small businesses in way that we believe is clearly prohibited by state law,” said NFIB State Director Dan Murray.

At issue is whether the City of Mission can charge businesses a “fee” based on how much traffic they generate.  Attorney General Derek Schmidt determined several years ago that the imposition wasn’t a fee at all, but a local excise tax that is barred by state law.  A district court state judge today made a different ruling, which Murray said could lead to a patchwork of similar local taxes across the state that would make it very hard on small businesses.  Under the ruling the “fee” is indeed a “tax,” but the city may continue to levy it based upon “home rule.”  Thus the court has legitimized, and potentially unleashed, a whole new class of unlimited, special local taxes on small businesses.

“We understand that local governments are starved for revenue but this is not an equitable solution and we believe that it will lead to a lot of confusion statewide as other municipalities follow Mission’s example,” said Murray.

In addition to the discriminatory nature of the “driveway tax,” there are serious practical problems as well, said Murray.

“First of all, there’s no reliable way for local officials to accurately estimate traffic generation for individual businesses, especially for businesses that share buildings and facilities,” he said.  “And it’s not possible to extrapolate business revenue from traffic.  There are plenty of businesses in Kansas that attract window shoppers that generate a lot more traffic than sales.”

Murray said that the businesses in Mission will continue to be affected by the ruling but that it won’t be long before the “driveway tax” becomes popular with local officials everywhere. 

“It’ll be open season on small businesses in Kansas, with local officials across the state seeking to solve their revenue problems with ever more creative taxes like this,” he said.  “It’ll be a nightmare especially for small businesses with multiple locations that will have to comply with a hodgepodge of local taxes.”

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