August 23, 2012 | Vol. 39, No. 34

City sends sales tax exemption to the voters

Petersburg City Council voted to send an ordinance increasing the sales tax exemption rate from $1,200 to $1,700 to the voters for the Oct. 2 election.

Before discussion opened for this item, Council member Nancy Strand amended the ordinance to increase the amount to $2,400.

“I think it should be doubled in order to accrue some money,” Strand said. “I also think with the big over run in the North Harbor project we are going to need to do some belt tightening and this is a good place to start.”

This amendment was not met with much support and many spoke against increasing the rate to that extent.

“We don't know how much this is going to generate raising it to $1,700 because we don't have a way to keep track of the sales over $1,200, I believe $1,700 might be adequate,” Council member Mark Jensen said. “I'd hate to see it go past that amount and find we have more than we need. I would rather raise it in small increments.”

The Petersburg Finance Committee, along with City Council have been looking for ways to raise funds that would be as painless as possible for the citizens of Petersburg.

“Since this is for the Harbor, it seems like it would affect fishermen and Harbor users more than the average citizen,” Council member Susan Flint said. “They are the ones making the big fuel, boat and outboard motor purchases and that is the reasoning behind this option.”

Council member Rick Braun stated that it has been 10 years since this tax cap has been raised. “I don't believe we are out of order increasing this tax cap,” he said. “But I do think that $2,400 is too much.”

Jerry Whitethorn of Alaska Commercial Electronics spoke on this issue as well.

“There is a lot of merchandise coming into Petersburg through the Post Office from Amazon and various other mail order operations,” Whitethorn stated. “The higher you make that sales tax cap, the less competitive local businesses can be for larger sales. The more we have to sell a product for locally, the more incentive it is to have that product shipped in from Seattle or other parts of the country.”

The amendment to raise the tax cap to $2,400 was defeated but the council voted unanimously to send the $1,700 increase to the voters.

The Oct. 2 ballot will read: Shall Ordinance #967, an ordinance amending the Petersburg Municipal Code to raise the sales tax exemption rate for the sale of goods and services from $1,200 to $1,700 be ratified by the voters? Check yes or no.

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