The city of Lewisburg is in the process of enacting an ordinance creating a business and occupation tax on contractors that perform services in the city. In order to understand the ramifications of this tax I have spoken with contractors, the mayor, and taxpaying, voting citizens of Lewisburg. To make note of my personal biases, I am a general contractor that does business in the city, and am duly licensed to do so, while at the same time I do not have a physical place of business in town, nor am I allowed to vote there.
I have been told by city hall that this is a “pass along tax.” That is to say that any legitimate contractor will pass this tax along to you the homeowner, for whatever project you decide to take on to improve your property. The amount to be levied is 2 percent per thousand dollars of construction cost; to be added to the building permit fee, which was recently raised from $3 per thousand dollars of construction cost to $6 per thousand of construction cost. This adds up to a substantial amount if you are building a home or undertaking a serious remodel.
Small cities struggle each day to fund services on limited budgets, and I understand that taxation is how we as communities fund ourselves and the things we find valuable. This tax, however, seems economically regressive as it discourages homeowners from improving their own property, which ideally improves the local economy as a whole, and it requires contractors to act as tax collectors, instead of laying this responsibility at the feet of elected officials that ask for this money.
As I am not a resident of Lewisburg, this situation also brings to mind the concept of taxation without representation. Do the math as you contemplate your next building project. Not exactly the coolest small tax in America.