The Navajo Nation Council passed a bill during last week's fall session that would increase the tribe's sales tax by one percent. President Ben Shelly this week is expected to sign the bill, which is hoped to help fund developments in education and energy on the reservation.
The increase, from 4 percent to 5 percent, will begin in January.
Currently, funds generated by the sales tax are allocated to the Navajo Nation General and Chapter Funds, as well as the Judicial and Public Safety Funds. The General and Chapter Funds get about 75 percent, and the Judicial and Public Safety Funds, about 25.
In 2013, the general and chapter fund will receive about 60 percent; the Judicial and Public Safety Fund, 20; scholarships, 10; and energy and education development, about 10.
While the percentage that existing funds will receive of the total sales tax revenue will decline, it should not affect how much money the funds receive because more money will be available, said Erny Zah, the spokesperson for the office of the president of the Navajo Nation.
Still, the public's opinion of the tax raise has not been outstanding, Zah said, and conversations with Navajo citizens have been "sticky."
"I wasn't aware of it," said Wolf Atson, manager at City Market grocery store in Shiprock.
Atson expects that his store will be affected
"People already shop in Farmington because of the tax," said Atson, who is not sure if more people will follow the trend once the sales tax increases.
The Navajo Nation presented its proposed tax increase across the reservation for the past few months, hoping for decreased skepticism and increased enthusiasm.
"We're trying to create a culture of self-sufficiency," said Zah, who said the tribe receives more than 75 percent of its funding from the federal government.
The sales tax should help decrease the tribe's dependency on federal funding, he said.
"We're trying to change the mind set," Zah said, explaining that the sales tax increase will be a step towards the Navajo Nation supporting itself. "Off the reservation, people pay taxes. We need to start changing."
The future tax rate still is substantially lower than the sales tax of surrounding communities.
The Navajo Nation Council passed the tribe's first sales tax about a decade ago, limiting the rate to no less than 2 percent and no more than 6 percent. The Navajo Tax Commission would have to alter the tax code to raise it above 6 percent.