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Bethel city council votes down sales tax amnesty ordinance

Christine Trudeau

On Aug. 23, Bethel City Council voted down a controversial ordinance to provide amnesty for businesses that have not been paying city sales tax. That ordinance proposed creating a short term amnesty program to eliminate fees, penalties, and some or all of the debt owed to the city by businesses that have not been paying sales tax revenue.

The intent of the amnesty program, which was introduced by council member Mary "Beth" Hessler, was to increase sales tax compliance among businesses without heavily penalizing them. Hessler argued that the current penalties are just too severe, and that with penalties and fees, the amount the city is asking from business owners is often up to five times the original debt. 

“It will totally put down businesses. It’s going to put people clear under in this time when prices are going up,” Hessler said.

In recent weeks, the city’s finance director, Duane Wright, has begun sending out audit letters to try to enforce the city’s sales tax code. The code requires businesses to collect a 6% tax on all business done within Bethel and then send it to the city. Hessler herself said that she was audited by the finance department for not having a business license to rent a room in her home. The amnesty program she proposed would not apply to city council members or their immediate family.

The finance director estimated that currently less than 20% of businesses in Bethel have been paying the correct amount of sales tax and that the city is leaving millions of dollars on the table. Sales tax revenue forms the backbone of the city’s budget.

“The city is fully within its right to collect taxes due to it,” Wright said. “I’m not in favor of this general amnesty and I'll leave it at that.”

Two members of the community spoke in support of the finance director’s mission to collect taxes, but not everyone was in favor. Council member Perry Barr said that he himself was audited and accused the finance director of using “SS tactics” to collect sales tax, including threatening to take legal possession of people’s houses until they paid their debt. John Sargent, the city of Bethel grants manager, said that the finance director audited his wife for making masks on a volunteer basis during the early days of the pandemic and accused her of running an illegal mask business. She was asked to pay $1,500, including penalties.

“I'm one of the victims of the sales tax audit by the new finance director,” Sargent said. “The next time the city needs volunteers, you can count us out.”

The council ultimately voted against the amnesty program 4-3. Those opposed to giving businesses amnesty, including council members Rose "Sugar" Henderson and Eric Whitney, argued that the taxes were crucial to operating the city, paving roads, and even having clean water. It was the businesses' responsibility to know what they owed. Council member Michelle DeWitt and Vice Mayor Conrad "C.J." McCormick also voted against the measure.

“If you have a business license and you haven't been paying your taxes, basically, shame on you,” Henderson said. “I understand it might be hard for somebody, it might put an undue burden on them, but I'm sorry. That should have been thought of when they collected the taxes in the first place.”

In other business, the council voted to adopt a ballot proposition that would ask voters whether Bethel should have a package store.

Will McCarthy was a temporary news reporter at KYUK. Previously, he worked as a furniture mover, producer, and freelance journalist. Will's written for the New York Times, National Geographic, and Texas Monthly. He holds a master's degree in journalism from UC Berkeley.