A small group of Alexandria companies, saying they were illegally charged when the city recently changed its utility tax rate, has demanded that the city refund an estimated $100,000 to businesses.
As of July 9, the city's utility tax rate was cut from 16 percent to 8 1/2 percent. However, the $150 limit on monthly tax charges was eliminated for businesses, in a move intended by the City Council to raise an additional $1.7 million annually.
"I got nailed big time," said Daniel S. Burns, general manager of the Landmark Center shopping mall. Burns said his monthly tax for gas and electricity rose from $24 to about $5,000.
"The increase wasn't unexpected," Burns said. "But we had been told the increase would take place as of July 9 and forward. The bill I recently received was from June 12 through July 11, and it was taxed at the new rate for the entire bill."
Representatives of the local Chamber of Commerce argue that the new rate applies to usage, meaning that gas and electricity used from July 9 onward would be taxed at the new rate. City officials said the new law applies to all bills issued after July 9, even if they include utilities used in the weeks before that date.
Assistant City Manager J. Thomas Brannen said the law was written to make clear that the new tax would be keyed to billing cycles, not daily usage. He and other city officials cite a passage in the ordinance stating that the tax "shall be paid . . . at the time that the purchase price or such charge shall become due and payable."
"Some people have said that the city has somehow been finagling people out of a month's utility bill, and it just ain't true," Brannen said.
Mayor James P. Moran Jr. also noted that the new tax was debated several times in public and that no one objected to the language on its implementation.
Moran also said the new tax mirrors utility measures adopted recently in Arlington and Fairfax counties.
"If they're repeating someone else's mistake, that's no justification," said Robert Richard, of the Alexandria Chamber of Commerce. Richard said the city violated the final provision of the ordinance, which says the new tax rate "shall not be effective until 60 days subsequent" to official notice to utility companies. "We're not suggesting the law needs to be changed," he said. "We need the law to be read correctly."
City officials, who say prorating the new bills would have been difficult, maintain that the city attorney has reviewed the matter and that the law will stand as it is being applied.