







P

resident Ben Shelly is talking to the Navajo Tax Commission about increasing the sales tax on the Navajo Reservation.

Related Many Diné not aware of sales tax exemption

Under Shelly's proposal, the sales tax, now at 4 percent, would increase by a penny per dollar, to 5 percent.

But, for the first time, he doesn't want this new tax to be imposed by the Navajo Nation Council. He wants to put the proposed increase on the ballot and see how voters feel about it.

The other taxes on the reservation were approved by the Council with little or no input from the people who would be affected by it.

Shelly said he would like to see the extra revenue earmarked for two programs, with the scholarship program getting half and the other half to be used to fund energy programs.

Scholarship program officials have been trying to get more funding for years, pointing out that the current level means that thousands of eligible Navajos each year don't get funded because there is not enough money.

As for energy programs, Shelly has made energy development one of his priorities and is looking for ways to pay for some of the alternative energy proposals that have come across his desk.

Martin Ashley, director of the Navajo Tax Commission, said adding a cent to the sales tax would generate between $5 million and $6 million a year.

The original sales tax of three cents is divided between the general fund and the chapters. Chapters certified under the Local Governance Act get full control over their share of the taxes while those who aren't certified are more restricted.

The fourth cent, which went into effect two years ago, was imposed solely to raise funds to build new jails and court facilities.

Tribal officials have been talking about increasing the sales tax at least since March when Albert Damon Jr., director of the Division of Economic Development, proposed using half for scholarships and half to fund economic development projects.

Shelly felt that the economic development projects would get enough funds through a $120 million bond proposal that the tribe is looking at, and that energy proposals needed some way to get funded.

Damon said even with a one-cent increase, reservation customers would still pay a lot less in sales tax than they do off the reservation.

Both Gallup and Farmington, he said, charge seven or eight cents per dollar.

Shelly's proposal is now under review within the tribal government but would have to go before the Navajo Nation Council as referendum legislation by the spring session, in order to be on next year's primary ballot in chapter elections.

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