A powerful but hidden tax

Exxon Mobil, BP Amoco, OPEC, and the City of Marion — all profit massively from rising energy prices while average consumers are left to foot an ever-increasing bill.

While it’s true that Marion’s proposed four percent increase in electric rates would reflect higher costs and keep its rates more or less in line with the state average, what most people don’t know is that the city makes nearly 100 percent profit on electricity it sells.

That profit is what the city uses to keep property and sales taxes artificially low. In essence, Marion is financially addicted to artificially high electric rates.

For a typical older home using an annual average of 1,200 kilowatt-hours per month, the annual profit to the city from overcharging for electricity is around $490, according to a Record analysis of data presented at Monday night’s City Council meeting.

The proposed increase would add $50 to the city’s windfall. Altogether, that’s $540 in energy “tax” compared with $596 in property tax on the same home, valued at $85,000.

Because the city’s energy “tax” isn’t treated like a regular tax, the burden of paying it falls disproportionately on lower-income residents.

When property taxes are levied, the more expensive your house is, the more you pay. However, rich or poor, households tend to use the same amount of electricity. If anything, less affluent residents may use more electricity because their homes are less well insulated and have older, less efficient heating, air conditioning and appliances.

The energy “tax” also doesn’t have the accountability other taxes do. Remember the contentious debate and multiple elections were needed to raise taxes to pay for a new county jail? Per taxpayer, the total involved was about the same as what Marion City Council could enact on its own, without voter approval, by increasing electric rates.

Higher electric rates are also a known deterrent to economic development. Businesses tend to locate where utility costs are lower — in the booming Dakotas, for example, where electric rates are 20 percent less than they are in Kansas. Marion can get around this by offering deals to potential new businesses, but again accountability suffers when some businesses are granted favors while others are not.

In the end, Marion probably needs the proposed higher electric rate, but Marion taxpayers need to understand focusing so much attention on property taxes blinds them to the true cost of government.

— ERIC MEYER

 

Quantcast