Agenda - Council - 02/10/1981 - Laserfiche WebLink

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State-collected taxes would be a five per- cent sales tax of which four percent was imposed by the Slate government and one percent was imposed by local §overn- ments. In such case the amount of revenue realized by the four percent (State- imposed) portion would be credited to the State government, the revenue from the one percent (locally-imposed) portion would be credited as local taxes. This situ- ation should be distinguished from a wholly State-imposed tax, where part of the tax revenue is shared with local governments. An example of a shared State tax would be a five percent sales tax wholly imposed by the State government, but which providesa 20 percent share to units of local govern- ment. The local government share of this State-imposed tax would be classified as an intergovernmental transfer and not as local taxes. Thus, in determining local taxes the point of reference is the government which imposed the tax rather than the govern- ment which expended the resulting tax revenue. Besides the "Memphis Rule" pro- visions described in the next paragraph, the only other exception to ~the foregoin§ description is that locally collected and re- rained shares of State-imposed taxes (inclu- ding any collection fees retained) are classified as tax revenue of the government ultimately receiving the proceeds. Certain sales taxes imposed by counties which meet the requirements of Sectioi~ 109(eX2XB) of the Revenue Sharin§ Act may be considered to be taxes of the units of local government within the co6nty rather than the county government. The "Mem- phis Rule," as this section is called, provides for situations whereby a county §overn- 10 ment imposes a sales tax within the geo- graphic area of local governments within the county, and then shares part or all of the applicable tax revenue with those local governments. These taxes must be trans- ferred by the county government without specifying the purposes for which the local governments may spend the revenues. In such cases, the Governor of the State must certify to the Secretary of the Treasury that the requirements of the "Memphis Rule" are met. This certification must be made by the Governor before the beginning of the entitlement period when the "Memphis Rule" is to take effect. The taxes which are transferred by the county to other units of local government will then be considered for revenue sharin~ purposes to be taxes of the other local governments and not the taxes of the county government. Amounts in lieu of taxe~, received by a government from a utility it operates are treated as internal transfers and are ex- cluded from taxes. Amounts in lieu of taxes received from utilities operated by other governments are reported as intergovern- mental transfers. The amount of total taxes of a local gov- ernment is adjusted for revenue sharing purposes to exclude taxes for educational purposes. Taxes for education include those allocated for school operation or fa- cilities, support of other public or private schools, retirement of school debt prin- cipal, interest payments on school debt, payments to a teachers' retirement system, etc. For some governments, tax revenues for educational purposes are not separately 11