The Village of Ephraim will ask voters to approve a 0.5% sales-tax increase in the village when they fill out their ballot April 6. The increase will come in the form of a Premier Resort Area Tax (PRAT), which is intended to help tourism-dependent areas fund infrastructure used by visitors who do not pay property taxes.
The state law governing PRATs was written in a way that narrowly tailors it to apply only to Wisconsin Dells and Lake Delton, but additional communities, including Sister Bay and Ephraim, have since been granted permission. Sister Bay instituted a PRAT in 2018, and the tax generated $230,888 during its first year in 2019.
Sturgeon Bay does not qualify to enact a PRAT, but the city attempted to get the state to make an exception as it struggled to pay for road improvements in 2019. Sturgeon Bay’s attempts to enact a PRAT through special legislation did not get far in the state legislature. A municipality must have at least 40% of its equalized assessed property values used by the tourism-related retailers in the community.
The Wisconsin Department of Revenue, which administers the program, estimated the tax increase will bring in $165,000 per year to Ephraim. The item will appear on the ballot as follows:
To pay for infrastructure expenses as defined in Section 66.1113(1)(a) of the Wisconsin Statutes, should the Village of Ephraim seek authority to levy a 0.5% (1/2 cent on the dollar) sales tax on tourist-related items sold, leased or rented through tourist-related retailers?
Though the question qualifies the tax as applying to “tourist-related items,” in practice, the tax would apply to almost everything that requires sales tax already, including sales at bars, restaurants, retail stores and hotels. Certain big-ticket items such as some home furnishings and vehicles are not subject to the tax, but nearly everything sold in Ephraim would be.
Sister Bay, Bayfield, Rhinelander and Wisconsin Dells, as well as the villages of Lake Delton and Stockholm have already instituted the PRAT.
Ephraim Village President Mike McCutcheon said the village does not have a specific need for the increased revenue.
“We don’t have a shortfall,” McCutcheon said. “But we were advised that it was a mechanism available to the village, and it was a good thing for the village to do.”
McCutcheon said the village does have a wish list of projects that the funds could be applied to, including shoring up Anderson Dock and Barn, erecting new streetlights in north Ephraim, improving the heating-and-cooling system in the village’s administration building, and building an addition for the maintenance-department building and the fire station.
At its March board meeting, the village voted not to support an increase in the county’s 5.5% room tax, which visitors who stay in hotels, inns and vacation rental units pay. An increase has been supported by the Village of Sister Bay, Baileys Harbor, Village of Egg Harbor, Washington Island, City of Sturgeon Bay, Liberty Grove, Gardner and the Town of Gibraltar.
The room-tax proposal, including a commitment by Destination Door County to fund local business associations, would have brought an estimated $177,000 additional dollars into village coffers.