Breckenridge should drop sales tax, not increase it
Retail is a tough proposition in Breckenridge. At $40 a square foot, plus taxes, maintenance and utilities, rents are on par with those of the Park Meadows Mall in Denver. Park Meadows, however, has parking and the retail experience is indoor; in Breckenridge, parking for the typical shopping schlub, insistent on driving to the door of his or her destination, is minimal.In winter it’s cold and windy, and in the summer, dusty in the morning and rainy in the afternoon. The same historic buildings that give the town character are a retail headache – small and hard to modify. The high cost of housing and an aging population limits the employee pool, and while there are good candidates, sometimes retailers just have to make do with heartbeats behind the counter.And the nature of retail and the customer have changed, a lot. Customers want brand names to keep up with the Joneses rather than differentiate themselves from the Joneses, something that big boxes can more easily provide. The Internet has made information and options available to customers everywhere, not just in large metropolitan areas, and customers now demand instant gratification at home as well as where they shop. Some retailers have adapted, changed their service styles and inventories to the needs of the new drive-by customer encouraged by cheap season passes. Many retailers, however, are just hanging on, on the edge of joining the retail dead. The Downstairs at Eric’s restaurant has a collection of signs from the departed which make for unique wall decorations. To Breckenridge retailers, the effect is similar to a cemetery, walls full of grim reminders of those that have gone before.And now the town wants to raise the sales tax on retail purchases from an already high 8.15 percent. After “where can I get discount lift tickets?” the most common question put to retailers is “wow, how much is the sales tax?” To customers from Houston or Kansas City, 8.15 percent is sky-high. Raising the sales tax rate will reduce retail sales. While the town does a lot for retailers, no one seems to realize that well-intentioned efforts to improve the pedestrian experience on Main Street will be a body blow to retail and restaurants. Ripping up Main Street curb to curb for two summers will cause sales along Main Street to drop by 20 to 40 percent while the construction is ongoing, and no amount of marketing will overcome orange cone zones, construction noise, and dust and service interruptions. Rather than raising retail sales taxes, the town should eliminate them.Imagine what a great sales promotion a tax-free zone would be. The town wouldn’t need to spend more on advertising because it would have handed itself a huge marketing tool at a stroke.To the Breckenridge retailer, hamstrung by an 8.15 penalty when trying to sell a plasma television or home art or a bicycle to a price-conscious customer, a store in Breckenridge now offers a sales advantage which can help overcome high rents and tricky sales spaces.People will seek out low-cost retail shopping; that is, after all, the essence of outlet store malls.Customers drive to them, as well as to malls in outlying suburbs of Denver that offer lower tax rates on purchases. Breckenridge restaurateurs and lodging companies would see a boost from more visitors. And while the town can’t waive the state and Summit Stage portions of the retail sales tax, surely the retailers could work out a rebate promotion in conjunction with local ski areas, wherein for every dollar a customer pays in retail sales tax, they receive $5 in Mountain Money.At a minimum, the town should consider a sales tax holiday, exempting retail sales from tax during the coming summers when Main Street gets its facelift and Park Street is improved. Retail sales would increase, the town would see new retailers, and residents would benefit from a tax break at the grocery store. New construction and remodeling would be encouraged by a tax break at the construction yard, increasing property tax and transfer tax receipts. Cutting taxes will stimulate economic growth; raising them will only help make the walls of Downstairs at Eric’s more decorative.Marc Carlisle writes a Thursday column. He can be reached at firstname.lastname@example.org.
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