Tax on Navajoland may increase by 1 percent
By Alastair Lee Bitsoi
Navajo Times
WINDOW ROCK, October 25, 2012
Last week during the Navajo Nation Council's fall session, the Council narrowly passed the Navajo Nation Sales Distribution Reform Act of 2012 with two amendments on a 9-7 vote.
The Reform Act and its amendments, pending Shelly's approval, increase the current sales tax on tribal land from 4-cents to 5-cents, with the 1-cent sales tax increase. The revenue collected from the 1-cent sales tax increase is slated to go to the economic development and scholarship funds.
Council delegate Dwight Witherspoon (Forest Lake/Hardrock/KÌts'iili/Pinon/Whippoorwill), a strong advocate of providing scholarships for all Navajo students from being a former educator himself, sponsored the legislation, which consisted of a year of hard work lobbying students, agency councils and chapter governments for support.
"I'm very happy with how it came out because that's exactly how I initially proposed legislation," Witherspoon said of the amendments, before adding, "...a half-cent would go to scholarships and a half-cent would go toward economic development."
Witherspoon estimates about $5 to $6 million to be generated from the 1-cent sales tax. Under the amendments, 10 percent, or half-cent, of revenue collected would be deposited into a scholarship fund and the other 10 percent, or other half-cent, collected and deposited into an Economic Development Fund.
The amendments would also decrease the amount of revenue currently collected for the general fund from 75 percent to 60 percent, and 25 percent to 20 percent for the Public Safety/Judicial Facilities Fund.
Martin Ashley, executive director for the Navajo Tax Commission, said about $7.4 million is generated annually from the current 4-cent sales tax rate, and that the increase would generate another $5 to $6 million.
Prior to passing the Reform Act, Council considered two other amendments that would have changed the original intent of the legislation, before agreeing on the two amendments sponsored by Council delegate Alton Joe Shepherd (Cornfields/Ganado/Jeddito/Kin Dah Lichii/Steamboat).
Amendments by Council delegates Mel Begay (Bahastl'ah/Coyote Canyon/Mexican Springs/Naschitti/Tohatchi) and Walter Phelps (Birdsprings/Cameron/Coalmine Mesa/Leupp/Tolani Lake) failed. Begay's amendment would have changed the entire complexion of the bill by giving 10 percent for economic development bond financing and 10 percent to chapters for development.
Phelps' amendment would have kept the 10 percent scholarship fund intact but provide 5 percent to chapters and 5 percent to an economic development fund.
Up to this point, Council debated on whether it would be worth charging an extra cent on Navajo Nation sales tax. Some members advocated against the increase, saying the elderly population are the only segment of society that pays sales tax by spending money on Navajo.
Whereas others such as Council delegate Leonard Tsosie (Baca-Prewitt/Casamero Lake/Counselor/Littlewater/Ojo Encino/Pueblo Pintado/Torreon/Whitehorse Lake) argued that Navajo people spend money off the reservation and pay as much as 8 percent in sales tax in nearby bordertowns.
Tsosie said if Navajo families spent their money on the reservation, rather than in bordertowns like Gallup, sales tax increases on the reservation wouldn't be an option.
Looking at Navajo families, they are willing to take their money hundreds of miles to a border town," he said. "The city of Gallup is taking advantage of this, and they are having the Navajo people pay for their waterline and its crazy that we allowed this to happen and that the Navajo people allowed this to happen to them."
After the amendments by Begay and Phelps failed and have listened to the extensive debate, Shepherd offered what he called a compromise. On a vote of 12-4, the Council agreed to the 1-cent sales tax increase by allocating money to both the scholarship and economic development funds.
"Economic development is really a necessity. There are no funds that go to them," Shepherd said. "We need to duplicate Farmington, Gallup, and Flagstaff on Navajo, so our people stay here to generate those revenues."
For the scholarship fund, he said, "Our young kids are our investment. There's not enough dollars."
According to Rose Graham, executive director for the Office of the Navajo Nation Scholarship and Financial Assistance, about 2,500 Navajo students receive funding from the tribe.
Although still not enough to fund all Navajo students, about $48 million is the demand to meet all needs, Graham said the half-cent the scholarship fund would receive would help vocational and graduate degree students.
"BIA funds us with $12 million," Graham said. "We run out of money when it comes to graduate and vocational students because the BIA doesn't want us to use funding for vocational students."
Even though the money wouldn't be available to fund students until 2014, Graham also said the bill would help with depleting scholarship funds.
"We're excited," she added. "It's an additional $3 to $5 million dollars. If you notice our handouts, in 2010 we had over $18 million. In 2011, it went down to $14 million because of budget cuts and problems in the market because a huge part of our funding is investments. We'll be able to fund a lot more students."
Like Graham, Albert Damon, division director for the Navajo Division of Economic Development, was ecstatic and eager about how the half-cent could help promote economic development on Navajo.
Damon said funds generated from the half-cent could turn around the millions of dollars that leak off the reservation into bordertowns and help with land withdrawal, infrastructure development, master planning at major corridors and match money for other economic development projects.
"We could do tremendous things to stop the overflow of money," he said.