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Article courtesy of the Kitsap Sun.

GIG HARBOR — Gig Harbor City Administrator Rob Karlinsey wants people to shop local. Not only does that help keep local merchants in business, it also helps pay for local roads, police, parks and other city services.

That’s because the sales tax collected by local businesses stays here in Gig Harbor.

“Sales tax is a big deal for Gig Harbor. We rely on sales tax to fund many of our city services,” Karlinsey said.

“We want people who live outside of our city to shop here, too,” he said, acknowledging that people who live on the other side of the Sound have to factor in the bridge toll when they shop here.

But Gig Harbor residents support local merchants and the city’s tax base — and avoid the toll — by staying on this side of the bridge to do their shopping.

In general, nearly all taxes in Gig Harbor are lower than on the other side of the bridge, Karlinsey said.

“Our property tax rate is actually lower than most other cities in Pierce County,” he said, although assessed values, for the most part, are higher in the Gig Harbor area.

The sales tax rate in Tacoma, University Place and Puyallup is 9.3 percent, compared to 8.4 percent in Gig Harbor, he said.

Kitsap County sales tax is just slightly higher than Gig Harbor – 8.5 percent. But in King County, it’s 9.5 percent.

“We get one-eighth of the local sales tax pie, so if you pay $8.04 in sales tax for something here, the city gets about a dollar of that. But that dollar stays local and supports our roads, our police and our parks,” he said.

“I’m a tax nerd, so I really pay attention to this kind of stuff,” Karlinsey said.

Online “e-commerce” purchases are another thorny issue.

“Online retailers by and large avoid sales tax, while brick and mortar stores have to pay it,” Karlinsey said. “That lack of fairness has harmed local merchants — Borders is an example.”

Jim Ullrich, owner of the Wild Birds Unlimited store in downtown Gig Harbor, estimated he loses about $50,000 a year to online retailers.

As an example, he sites an online retailer in Wisconsin. “When you buy a spotting scope or a pair of binoculars from them, you don’t pay any sales tax. You can buy the very same binoculars from me, and you’ll pay sales tax. Our shop has online sales, too, but we have to charge sales tax.

“I know for a fact that quite often people come into my store to look at products and ask me questions and do their research. I do all the work helping them choose the best product, and then they turn right around and order the thing online just to avoid paying the tax,” he said.

“Not only do I lose the sale, the city loses the sales tax revenue,” he said. “You can’t compete with the big online retailers who do that.”

It’s not just online retailers that cut into local tax revenues, Ullrich said. Occasionally, vendors at farmers markets, local art festivals and other seasonal events make deals with customers to avoid paying sales tax, he said.

“We merchants are the revenue collectors for the city, the county and the state. We help keep things going,” he said. “I just want us all to be on a level playing field.

“I’d love for the city to be able to get all the appropriate taxes that they’re entitled to. I want the city to do due diligence with some kind of form showing the requirements for sales tax collections.

“I’d also like to see the State Department of Revenue go to online retailers and demand that they collect Washington sales tax when they make a sale to someone here.”

He added that online retailers headquartered in Washington, such as, do collect state sales tax.

As for Karlinsey, he’d rather have his tax dollars stay in Gig Harbor. “I go out of my way to shop here,” he said. “I hope people will think about all this and think twice before they go to the Tacoma Mall.”