DC Council Proposes Sales Tax Hike as Metro Bans Negative Balances – The Hoya
By Emma Kotifica
The Washington, D.C. Council proposed a bill Nov. 7 to increase the city’s sales tax to 6.5 percent from 5.75 percent to fund repairs and other expenses for the Washington Metropolitan Area Transit Authority as the transit agency looks to fund capital improvement projects.
The proposal came before Metro announced a change to its policy Nov. 24, saying that it will no longer allow negative balances on SmarTrip cards, the system’s stored-value transit cards, in an effort to increase revenue.
The sales tax would apply to the greater D.C. region that is serviced by Metro, including suburbs in Maryland and Virginia. A panel of local leaders last April recommended a 1 percent increase, but the Council ultimately settled on 0.75 percent, as this was the lowest rate that would still provide the $500 million dollars the Council hopes to generate annually.
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WMATA lacks a dedicated funding source, relying on the D.C. government and seven other local and state jurisdictions for funding. In the past, Metro has relied on fare increases and service cuts to make up for its financial shortfalls, though these actions worsen WMATA’s declining ridership.
Three left-leaning think tanks — the D.C. Fiscal Policy Institute, the Maryland Center on Economic Policy and The Commonwealth Institute for Fiscal Analysis — published a report in August advising against the sales tax proposal, citing a greater impact on low-income families.
The think tanks reported that lower-income families could experience an effect five times greater than middle and upper-class families. The report suggests that each participating jurisdiction be given a revenue goal, but each jurisdiction would come up with its own plan to raise the money.
The think tanks also proposed a tax on corporations because “they can best afford to pay and because they have benefited most from D.C.’s growing economy.”
