Borough lost opportunity for creating goodwill
Since the Petersburg Borough is a 6% partner with every business within their jurisdiction, it seems intuitive that their best interests would be served by working with those businesses to expand the economy with the use of tax-free shopping incentives for local shoppers. Since the Petersburg Chamber of Commerce had worked with the body to create Ordinance 954 and voters approved the ordinance allowing up to two tax free days per year, the effort was making inroads to give shoppers yet another reason to shop at home… not in Juneau, not in Seattle, not on the internet, but here in Petersburg.
Local businesses collect and account for the city’s sales tax day after day, week after week and deserve the promotional opportunity afforded by the sales tax holiday to increase both sales and traffic within their stores during this event.
On Monday, citing budget constraints, the Assembly nixed the event businesses had planned for Saturday May 11.
Both shoppers and business owners should be concerned. The assembly while well within their rights to not declare the tax-free day ignored the wishes of the voters that voted for this borough-wide event.
Certainly with a $9 million annual budget there were opportunities to salvage this opportunity to work with both businesses and shoppers who pay sales taxes the other 363 days of the year.
Most merchants participating in the past two tax-free days have reported increased store traffic and sales on the tax-free days. For those who felt the event had no impact on their business, the opportunity existed if the tax-free event was allowed to happen. Now an event that should be established at fixed times for both shoppers and merchants, will be represented by a big, “maybe.”
It took years for Wrangell’s merchants to establish the event in their community, and now both shoppers and most businesses look forward to the twice-yearly event, and many even plan their purchases accordingly.
We think the Assembly ignored the key argument presented by the Chamber of Commerce as they lobbied for the event. While sales tax revenue is impacted for two days, the purchase of boats that may eventually pay moorage in the harbor, or the home additions constructed from building material purchased on that day will increase property tax income. Thus, sales tax revenue may go down, but new income could result in additional income paid into property tax and harbor accounts.
Likewise the Assembly ignored the fact that a dollar spent in town will circulate 5-7 times between local merchants before it leaves town.
As one merchant who has conducted a large retail business here for more than three decades noted, “There are more benefits than negatives for such an event. Most importantly, the Borough missed out on the goodwill that results from the tax free event.”
That goodwill is a huge line item that took a bigger hit than the $23,979 that cost the sales tax fund during the prior tax free events.